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Understanding the Surge in Inheritance Tax: A Closer Look at the UK Scenario


The Rise in Inheritance Tax Receipts

In the UK, inheritance tax receipts have seen a significant increase, reaching £2 billion from April to June 2023. This is £200 million higher compared to the same period in the previous tax year. The data, released by HM Revenue and Customs (HMRC), highlights how years of house price increases, soaring inflation, and tax freezes have pushed an increasing number of families above the threshold for inheritance tax. In the 2019/20 tax year, the average inheritance tax bill was over £200,000, and the total tax take has increased since then, totaling £7.866 billion in the last tax year.


Understanding the Surge in Inheritance Tax


The Impact of Falling Asset Prices

While the numbers are staggering, there's another side to the story. With asset prices falling, many families could find they have overpaid their inheritance tax. If properties or shares were valued back in 2022 but are only now being sold, there's a strong chance they will be sold for less than the value on which the inheritance tax was paid. Fortunately, there are ways to claim back the overpayment.


Forms to Reclaim Overpaid Tax

Nicholas Hyett, Investment Manager at Wealth Club, points out that there are two forms that can help you reclaim overpaid inheritance tax. The 'Loss on sale relief' or IHT25 form can be used to claim back on the sale of qualifying investments such as shares. The IHT38 form, which is lesser-known, allows you to claim back money on the sale of a property or land. Beneficiaries have four years from the date of death to make these claims and could potentially save tens of thousands on some larger estates, especially now that house prices are falling.


Rumors and Realities

There are rumors that the UK government might be considering scrapping inheritance tax altogether. While this could clear up backlogs, the reality is that in some circles, inheritance tax is already considered a voluntary tax, thanks to government-sponsored schemes designed to encourage investment into crucial parts of the UK economy.


Strategies to Mitigate Inheritance Tax

For those concerned about inheritance tax, there are several strategies to consider. One is giving money away early. Gifts taken out of regular income, which do not affect the giver’s standard of living, are inheritance tax-free from day one. Another strategy is investing in companies that qualify for Business Property Relief, which are typically inheritance tax-free after two years. Investing in an AIM ISA is another option. While ISAs are not inheritance tax-free, AIM ISAs could be IHT free after two years.


The Complexity of Inheritance Tax

Inheritance tax is a complex issue that has been further complicated by fluctuating asset prices and potential legislative changes. While the rise in receipts indicates that more families are being affected, there are still ways to navigate the system effectively. Whether it's reclaiming overpaid tax or planning ahead with strategic investments, understanding the intricacies of inheritance tax can save families significant amounts of money.


How an Inheritance Tax Accountant Can Help You Manage Your Inheritance Tax in the UK


How an Inheritance Tax Accountant Can Help You Manage Your Inheritance Tax in the UK?


The Importance of Inheritance Tax Planning

Inheritance tax (IHT) in the UK is a tax levied on the estate of a deceased person. With the current threshold set at £325,000, any estate valued above this amount is subject to a 40% tax rate. Given the rising property prices and asset values, more people find themselves above this threshold, making inheritance tax planning crucial. This is where an inheritance tax accountant comes into play. These professionals specialize in navigating the complexities of inheritance tax, helping you manage your estate more efficiently.


Expertise in Tax Laws and Regulations

Inheritance tax laws in the UK are intricate and subject to change. An inheritance tax accountant stays updated with the latest legal changes, ensuring that you are in compliance with the law while maximizing your tax-saving opportunities. They can guide you through various exemptions and reliefs available, such as Business Property Relief or Agricultural Property Relief, which can significantly reduce the IHT liability.


Asset Valuation and Distribution

One of the key roles of an inheritance tax accountant is to accurately value the assets in an estate. Incorrect valuations can lead to overpayment or underpayment of taxes, both of which have their own set of complications. Overpayment results in a financial loss, while underpayment can lead to penalties. An accountant can also help in the equitable distribution of assets among beneficiaries, taking into account the tax implications.


Strategic Planning for Tax Reduction

An inheritance tax accountant can help you devise a strategic plan to minimize your tax liability. This could involve gifting assets to family members or setting up trusts. In the UK, gifts made more than seven years before the donor's death are generally exempt from IHT. An accountant can guide you on the timing and nature of gifts to make the most of this rule.


Navigating Complex Family Dynamics

Inheritance tax planning often involves dealing with complex family dynamics. An experienced accountant can act as a neutral third party, helping to mediate discussions and provide solutions that are fair to all parties involved. This is particularly useful in cases involving blended families, business assets, or overseas properties.


Assistance with Paperwork and Compliance

Filing inheritance tax returns involves a lot of paperwork and strict deadlines. An accountant can help you gather the necessary documents, fill out forms accurately, and submit them on time. They can also represent you in dealings with HM Revenue and Customs (HMRC), ensuring that the process goes as smoothly as possible.


Long-term Financial Planning

Inheritance tax planning is not just about the here and now; it's about securing your family's financial future. An inheritance tax accountant can integrate your IHT planning into a broader financial plan, taking into account your retirement planning, investments, and other financial goals. This holistic approach ensures that you're not just saving on taxes but also building a secure financial legacy for your loved ones.


Tailored Solutions for Unique Needs

Every family is different, and so are their financial and estate planning needs. An inheritance tax accountant can provide tailored solutions that suit your specific circumstances. Whether you have a family business, overseas assets, or unique family dynamics, an accountant can offer bespoke strategies to manage your inheritance tax effectively.


Peace of Mind

Perhaps the most significant benefit of hiring an inheritance tax accountant is the peace of mind it brings. Knowing that a professional is handling your estate planning allows you to focus on other important aspects of life. It also provides reassurance that your family will not be burdened with financial complications during an already difficult time.



In conclusion, an inheritance tax accountant is an invaluable resource for anyone looking to manage their inheritance tax in the UK. Their expertise in tax laws, strategic planning, and financial management can save you not only money but also time and stress. With their help, you can navigate the complexities of inheritance tax and secure a financial legacy for your family.






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