The increase is largely due to the recovery in property and share prices, as well as an increased focus by HM Revenue & Customs on the collection of the tax, and with the IHT threshold now frozen until 2019 and a housing market recovery beginning, it is likely that revenues will rise even further.
This is the third increase of IHT in a row, with the tax paid in this latest year up by 29 per cent on 2009-2010, when it bottomed out at £2.4bn. Meanwhile, the IHT income in the tax year ending April 2013 was £3.1bn, up from £2.9bn the previous year.
The highest IHT tax-take was in 2007-2008, when it was £3.8bn, which shows a clear link between what many see as a very emotive tax and a rise in house prices. The same tax year saw the peak of the housing market and the onset of the credit crisis.
The report attributes the fall-off to plummeting house prices after that period, as well as the change in IHT policy, where married couples were permitted to pass their IHT allowances to one another, effectively doubling a family’s allowance.
The IHT allowance is currently frozen at £325,000 per person, making the tax-free amount a married couple can bequeath £650,000, which the Government says is likely to remain the figure for several years.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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