HMRC have just released details of how much inheritance tax (IHT) they have taken from the estates of deceased UK individuals and the total last year soared by 22%, to an all-time record level of £4.6 billion.

Since 2009-10, the amount taken in IHT has increased on average by 12% each year and is now at the highest level since IHT was introduced in 1986.

A lot of this increase is due not only to house prices (8.4% last year, according to the Halifax House Price Index), but also to the fact that the standard amount someone can leave without IHT being payable (the Nil Rate Band) has been unchanged since 2009 – and will continue to be frozen until 2021.

Facts about IHT

  • It is payable when someone dies and they leave their assets (their ‘estate’) to someone other than their spouse or registered civil partner.
  • The first £325,000 of their estate is taxed at 0%.
  • If they had a spouse or registered civil partner die before them, their £325,000 might also be carried forward so the first £650,000 of the estate when the survivor dies would be taxed at 0%.
  • Above those thresholds, everything is taxed at 40% (or 36% if you leave substantial amounts to charity).
  • For example, a widow leaving £1 million could have £140,000 taken from her estate to pay IHT (based on a £650,000 threshold).
  • From April 2017, the 0% IHT band could be increased if you have a residential property, left to your direct descendants (the Residence Nil Rate Band)
  • The rules about IHT and how to avoid it are complicated; legitimate options still available include outright Gifts and gifts to Trust, as well as certain types of investments.


The information within this newsletter is based on our current understanding of HM Revenue & Customs guidance. Tax relief is dependent on your own particular circumstances and subject to change. It is recommended that you seek professional advice before making any financial decisions.