More estates were pulled into the IHT net long before the Government’s changes to the IHT regime at the Autumn 2024 Budget, points out Utmost Wealth Solutions.
Latest Inheritance Tax liabilities statistics, for the 2022 to 2023 tax year, show that in the 2022-23 tax year, 4.62% of UK deaths resulted in an Inheritance Tax (IHT) charge, increasing by 0.23 percentage points since the tax year 2021 to 2022. This means that IHT is payable on fewer than 1 in 20 estates, as it has been since 2007 to 2008, and broadly since statistics were first produced. This proportion is now equal to its previous 2016 to 2017 high
The total number of UK deaths that resulted in an IHT charge has also increased. In the tax year 2022 to 2023, there were 31,500 taxpaying IHT estates, an increase of 3,700 (13%) since the previous tax year, 2021 to 2022. Fewer than half of all deaths in any given year require interaction with HMRC to establish whether there is a liability to be paid
IHT tax liabilities created in respect of the tax year 2022 to 2023 were £6.70 billion. This was a rise of £0.71bn (12%) compared to the previous year
Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, points out that the figures show that in the 2022–23 tax year – long before the Government’s changes to the Inheritance Tax regime at the Autumn 2024 Budget – more estates and trusts were being pulled into the IHT net and total liabilities continued to rise. “This was largely driven by the decision to maintain the IHT tax free thresholds and rising asset values,” he says..
“With the nil-rate band still frozen and the changes to the IHT regime announced in the Autumn 2024 Budget, the number of estates exposed to IHT is likely even higher today. By the end of the decade, the OBR estimates that the proportion of deaths subject to inheritance tax will rise from 5.1% in 2022/23 to 9.5%. This figure is before factoring in any further possible changes the government may introduce such as the tightening of longstanding reliefs, which many now fear could be on the horizon.
“Combined, these developments are making the UK increasingly less attractive from a wealth perspective. Ever since the measures announced in the Autumn 2024 Budget, high-net-worths and non-doms have been leaving the UK at an unprecedented rate. At the same time, we have experienced strong and growing demand for financial advice from families seeking estate planning strategies to protect intergenerational wealth and avoid unintended tax consequences.”
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