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When A Freeze Is A Tax Rise In Disguise… – Inheritance Tax

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Inheritance tax receipts rose by 13% for the 2021/21 tax year
with increases continuing to be seen for April and May 2022.

The rise in the inheritance tax (IHT) receipts by HM Revenue and
Customs are a direct result of the nil rate band (the value of an
estate which is inheritance tax free) being frozen since 2009 – and
therefore not adjusting in line with inflation – and being
particularly far behind rising property prices.

The nil rate band (NRB) is not due to be increased until at
least tax year 2025-26 by which time the Office of Budget
Responsibility has estimated that inheritance tax receipts could
increase by more than a third to over £8.3 billion. In effect
the freeze in the Nil Rate Band means more people have fallen – and
will continue to fall into – the requirement to pay IHT. The freeze
of the NRB is a tax rise by another name, clearly illustrated by
both the rate of increased tax taken by HMRC and the predictions
for continued increased tax liabilities over the forthcoming
years.

Ensuring those impacted by rising property values and a stagnant
NRB understand their position and the options available to them is
vital – there are valid legal steps which can be taken to minimise
the IHT a person pays on their estate. Through well planned life
time gifting, preservation and use of all available exemptions and
allowances, IHT liabilities can be legitimately reduced.

Ensure you consider your own and/or your clients IHT position
and take early specialist advice to plan for the future and
appropriately mitigate tax payable. If you’d like to explore
your tax position and how you can mitigate your liability do get in
touch – my colleagues and I would be delighted to assist.

Originally published 24 June, 2022

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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