HMRC investigates a quarter of estates that pay IHT
In the 2018 to 2019 tax year, HMRC opened 5,537 inheritance tax (IHT) investigations, which equated to almost a quarter (23 per cent) of the 22,000 estates on which the tax is applicable.
IHT is levied at a rate of 40 per cent of an estate’s total value on all estates valued at £325,000 or more. This £325,000 threshold is known as the ‘nil-rate band’ and has remained frozen at this amount for several years.
According to recent figures, there has been a 3.4 per cent increase on the number of investigations opened by the Revenue the previous year and on average 5,000 IHT cases are opened every year.
Since April 2017, the number of IHT investigations has grown by 7.8 per cent since the Residence Nil Rate Band (RNRB) was introduced in April 2017.
In total, Government figures indicated that receipts from this tax alone had hit a record high of £5.2 billion.
A recent Office of Tax Simplification (OTS) report called for an overhaul of IHT, suggesting that the seven-year period during which a lifetime gift may be subject to IHT should be reduced to five years.
The unpopularity of IHT has resulted in the OTS receiving more responses to its request for views on the tax than for any other consultation.