Recent figures released by HMRC about Inheritance tax in the UK show an increase in the value of estates and a drop in business and charitable relief claims. This resulted in increases in 2018/19 tax receipts to £5.4billion.

The published figures are for the 2018/19 tax year for tax receipts and 2016/17 for other data relating to the composition of estates, the use of reliefs and the tax due on estates passing on death. The delay is due to the 6-month lag from date of death to when the IHT becomes due and subsequent time lags, while the data from tax returns is prepared for analysis by HMRC.

There was a £15bn (23%) increase in the gross capital value of estates since 2010, to £80. It was £1bn for 2016/17.

This is perhaps unsurprising given that the total number of UK deaths that resulted in an IHT charge has increased every year since 2009/10, with a 15% increase between 2015/16 and 2016/17.

  • 80% of the increase in the value of estates relates to residential property.
  • Nearly half of all IHT paid in the UK comes from estates in London and the South East, with Wales and the North having the lowest figures, probably due to lower property prices.
  • The gender split is relatively equal. The average taxpaying female-owned estate has a slightly lower net capital value but a slightly higher tax charge than that of the average male estate. This is thought to be because women live longer so cannot benefit from the spouse exemption.
  • Business Property Relief, Agricultural Property Relief and charitable exemption claims dropped by 18% between 2015/16 and 2016/17.

Despite the above increases, less than 5% of deaths in 2016/17 resulted in an inheritance tax charge when predictions from the Office of Budget Responsibility at the time were that the figure would rise to 8%. However, this compares to just 0.2% paying federal estate tax in the USA where the level of exemptions are considerably higher.

Links to our guides:

IHT Business Property Relief (subscriber guide)
A guide to what Business Property Relief is, when it can apply and pitfalls and planning points.

IHT Agricultural Property Relief
What is Agricultural Property Relief? When does it apply? What are the conditions and restrictions of the relief?

IHT: estate planning checklist
This basic checklist covers some of the essential planning points that taxpayers should know when planning for their estate and inheritance tax.

IHT relief: 10% discount for charitable bequests
IHT: 4% rate reduction. When does it apply?

IHT: lifetime charitable giving

External link:

Inheritance tax statistics; commentary

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