BVWire—UK estimates that 28,000 estates fall into the inheritance tax (IHT) rules this year, an increase from 24,500 in 2015/2016. Treasury does well with this tax, having collected £5.36 billion in 2018/19.
All estates valued at £325,000 or above must pay IHT. The increase in filings continues primarily because this threshold has not increased since 2008.
Since most estates in the low end of the IHT filings are comprised primarily of real property, many commentators noted that the residence nil rate band (RNRB), a £150,000 tax-free allowance on the main residential home, might reduce HMRC collections. This has not been the case.
The growth in IHT filings has contributed to keeping fiscal valuators busy the last few years, particularly with small and medium enterprise (SME) business valuations. In addition, a larger group of small-business owners have engaged in lifetime gifting of income, real, and business assets, and other tax planning provisions, in the hopes of reducing their family liability upon death. Even an economic downturn is unlikely to slow the increase in IHT filers, and, while rumours persist, no review of fiscal policy around inheritance taxes is predicted.
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