Blog

14/12/18
This is an interesting “contextual” extract from the first part of the OTS report on the simplification of inheritance tax (IHT).

IHT: some facts
How many people pay IHT?
Each year, fewer than 25,000 estates in the UK are liable for IHT. This is less than 5% of all deaths. The number of liable estates has increased every year since the 2009/10 tax year. This is partly because of the freeze of the nil rate band (NRB) and partly due to increasing estate values. Much of the increase in estate values is due to increased residential property values.

How many people fill out IHT forms?
In the UK, on average, around 570,000 people die each year. IHT forms were completed for 275,000 estates in the UK in the 2015/16 tax year, over ten times the number of estates on which any IHT was paid. This means that an IHT form was submitted for around half of all the deaths in that year. The forms need to be submitted because the value of the estate must be reported to HMRC, even where there is no tax liability.

How much does it raise?
IHT makes up less than 1% of the total tax raised by the Exchequer. Receipts totalled £5.2 billion in the 2017/18 tax year. To put this into context, this would cover just over one week’s worth of the cost of providing UK pensions and welfare benefits that year. IHT receipts have been steadily increasing. In the 2009/10 tax year receipts were £2.38 billion, and whilst the increase is forecast to continue, it is expected to slow as the residence NRB takes full effect. The tax gap for IHT (the difference between the IHT that should be paid and the IHT actually paid) is estimated at around £600 million per year. This is relatively high, as a percentage of the total IHT due, compared with other taxes.