Following the ONS IHT data for the tax year 2020 to 2021 published this morning industry experts have reacted and shared their thoughts with IFA Magazine.
Joshua Gerstler, chartered financial planner at Borehamwood-based The Orchard Practice: “The government collected almost £6bn in inheritance tax in the year. That is £6bn of wealth that should have gone to the children and beneficiaries of hard-working families. That is also £6bn that has already been subject to other taxes during people’s lives, such as Income Tax, Capital Gains Tax and Value Added Tax, to name just a few. The sooner this tax is removed, the better.”
Ross Lacey, director at Rayleigh-based Fairview Financial Management: “With the thresholds for IHT frozen until 2026, without proper planning, we can see the number of people having to pay inheritance tax increasing.”
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “The latest inheritance tax annual bulletin is a reminder that only a small proportion of estates are liable for paying the tax, although we expect the frozen thresholds and increase in property prices through the pandemic to push more estates into paying inheritance tax.
“Inheritance tax continues to return a tidy sum to The Treasury with the latest data showing that it generated around £22 million every day through the first quarter of this financial year – but rumours persist that the government will consider taking the radical step of scrapping it to curry favour with the voting public.
“Regardless of what any political party may promise, these rising inheritance tax receipts should act as a warning for people to remember to assess the entire value of their estate, including an up-to-date valuation their property.
“Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill.”
Shona Lowe, Financial Planning Expert at abrdn, said: “Thanks to years of soaring property prices across the country, alongside the ‘nil-rate’ band freeze, which has been in place since 2009 and will remain until at least 2028, IHT is no longer the ‘wealth tax’ it once was. This means the total amount paid is increasing year-on-year and with more people caught in the inheritance tax net, it’s more important than ever that people do what they can to reduce their IHT bill.
“Firstly, calculate the value of your estate, making sure you have an up-to-date Will and Power of Attorney, that the expressions of wish or nomination for your pensions are in place and that where appropriate, life cover is written in trust.
“Next, we need to do a bit of myth-busting when it comes to making lifetime gifts. One thing that many people wrongly assume is that if they make a gift, the amount of that gift will always reduce the value of their estate for IHT purposes straight away. Unfortunately, that’s not always the case, with some gifts taking seven years for the value to fully leave your estate for tax purposes. It all depends on the amount you gift and who it’s to.
“And it’s not all about gifting. There are other options, such as making use of business relief, trusts and insurance that should be considered depending on your individual circumstances.”