HMRC’s £7.1 billion IHT receipts for 2022/2023, an increase of more than £1 billion from the same period a year before, and a forecast from The Office for Budgetary Responsibility that inheritance tax receipts for 2023/2024 will be £7.2 billion, clearly show the extent to which inheritance tax receipts are increasing.
Clare Moffat, Pensions & Legal Expert at Royal London, explains more:
“Much of the jump in inheritance tax receipts is due to increasing house prices. Individuals have a nil rate band of £325,000 each plus a residence nil rate band of £175,000 if their home is passing to a child or a grandchild. If a couple are married or in a civil partnership, the remaining spouse won’t pay inheritance tax on the first death. The nil rate bands will be transferred which gives the magic million pound figure, before inheritance tax is paid, on second death.
“However, 7.2 million adults live as part of a cohabiting couple in the UK and cohabitees don’t have the same rights in relation to inheritance tax, which limits the inheritance tax threshold at £500,000. So, not only will they be paying more inheritance tax than those who are married or in a civil partnership but if there isn’t a will then there are no rights under the intestacy laws.
“This could be an issue for the 4.6 million cohabiting couples in the UK who don’t have a will. No-one likes thinking about death but writing a will can make life much easier for those left behind, especially cohabiting couples.”
