Inheritance tax receipts rise – how to protect your estate

Inheritance tax (IHT) receipts hit a record high of £3.06 billion in the first four months of this financial year, the latest HMRC data shows.

This is an 8% increase on the same period last year – a rise of £229 million.

The figures will be concerning for families worrying about upcoming inheritance tax changes, which are set to send the IHT take for the Treasury soaring.

IHT is predicted to generate £9.1 billion for the Treasury by the end of this financial year, and more than £14 billion by 2029/30.

What to do if you are worried about IHT

It’s important that any families worrying about their estate being subject to IHT keep track of the value of their assets, including getting an assessment of their property value.

You should also consider speaking to a financial adviser or estate planning specialist if you want help understanding your potential IHT liability, or are looking for ways to mitigate your IHT bill.

Some ways you can mitigate your bill include making the most of gifting allowances – where you gift money to loved ones tax-free. You can give away up to £3,000 a year tax-free, and unlimited ‘small gifts’ of £250 per person.

You can also give away larger gifts over this threshold, which will be tax-free as long as you live for seven years after making the gift.

It’s also important to make a will and keep it up-to-date. If you leave everything to your spouse or civil partner, they won’t have to pay any IHT on your estate.

Remember, only around 5% of estates are currently subject to IHT, and this is expected to rise to 10% by the end of the decade. That means 90% of estates will still not have any IHT liability.