New Inheritance Tax (IHT) figures from HMRC have shown a slight fall in receipts for the first time in 10 years.
In 2017-18, 3.9 percent of UK deaths resulted in an Inheritance Tax (IHT) charge, decreasing by 0.7 percentage points since 2016-17. This reverses the longer term increase in this proportion since 2009-10 and is likely due to the introduction of the Residence Nil-Rate Band (RNRB) tax-free threshold in April 2017.
The introduction of the RNRB also means the total number of UK deaths that resulted in an IHT charge has fallen for the first time since 2009-10. In 2017-18 there were 24,200 such deaths, a decrease of 3,900 (14 percent) since 2016-17.
Similarly, in 2019-20 IHT receipts decreased for the first time since 2009-10. HMRC received £5.2 billion during 2019-20, a decrease of 4 percent (£223 million) on 2018-19. This is likely because of the effects of the RNRB’s introduction in 2017-18, as there is a delay between death (when the tax charge is created) and receipts (when HMRC receives the tax payment).
Mike Hodges, a partner in the private wealth team at Saffery Champness, said the decrease in the proportion of estates paying inheritance tax and the first fall in total IHT receipts in over a decade were likely to increase further the pressure to reform IHT at a time when the Exchequer needs to raise extra funds to pay for the Coronavirus crisis.
“If, as HMRC suggests, last year’s fall in receipts is a result of George Osborne’s Residence Nil-Rate Band, this may increase the perception that those who some may say can afford to pay a little more tax are not shouldering their fair...