The government has just published its latest inheritance tax statistics.
These show that:
- Inheritance tax receipts totalled £5.2 billion in 2017-18; an increase of 8% (£388 million) compared to 2016-17.
- This year sees the highest number of estates claiming the 4% discount for charitable giving (2,020), saving a total of £350 million. This is a rise of over £50 million on the previous year, although still less than 10% of total paying estates.
- In 2015-16 there were 24,500 estates liable to inheritance tax, an increase of 1,300 since 2014-15.
James Hender, a partner and Head of Private Wealth at Saffery Champness, commented:
“These statistics show reliefs for charitable giving are at the highest level ever. We are currently seeing hospices, children’s charities, animal charities and charities relating to illnesses like cancer being most often considered in a legacy. For small charities, donations that take advantage of inheritance tax relief can be a game changer.
“However, while the number of estates claiming the 4% charitable giving discount has increased, they still account for less than 10% of total liable estates. George Osborne famously pledged to make legacy giving the new norm, but this still has some way to go with many wills not updated after the new relief was introduced and taxpayers still often unclear as to the reliefs available to support giving.
“Very clearly, the South of England continues to contribute the lion’s share of inheritance tax receipts, further reinforcing the economic contributions of, and concentration of wealth in, the region.
“Whilst often incorrectly decried as a gift to the super rich (it has no benefit for those worth more than £2 million) the main residence nil rate band continues to help many affluent families in middle England. Those inheriting from the estates of the older generation that benefited from the main residence nil rate band relief will be pleased that the tax saving gives them a little bit more to help them on to the property ladder.
“Recent analysis by the Office for Budget Responsibility suggested that inheritance tax receipts in the last year – 17-18 – began with a significant uptick. This was, according to the OBR, due to people looking to obtain probate (for which the payment of inheritance tax is a precondition) in advance of a proposed hefty rise in probate fees. While the proposed probate fee increase never materialised, the ripple effect may still be seen in future inheritance tax receipt announcements. Going forward, the plans for increased probate fees cannot be ruled out as all government departments are looking for new ways to raise funds.
“At the same time we are awaiting an update from the Office of Tax Simplification on possible reforms to the inheritance tax regime – so change may be coming. Apathy can be a real issue with regard to wills and legacies, and taxpayers should be looking to ensure their wills are up-to-date and that they, and their beneficiaries, are able to make the most of the reliefs that are available.”