Inheritance tax revenues are set to top all-time highs this year, driven by higher house prices, data from EasyMoney shows.
The levy is on course to hit a record £7.8bn in the 2023/24 financial year, up 10% on 12 months ago, after so far hitting £2.6bn in the first four months of this year, says the peer-to-peer real estate investment platform.
This comes after HMRC raised £7.1bn from inheritance tax last year, up 17.1% on the year before, which was the second largest annual rise in the last 20 years, only beaten by a 22.2% jump in 2015/16.
The moves come as home prices have spiked since the pandemic due to such reasons as ‘the race for space’ and chronic housing stock shortages.
However, it points out that average prices are still £59,000, or 19%, higher than in the pre-pandemic market of August 2019.
EasyMoney chief executive Jason Ferrando says: “A rise in inheritance tax normally means one of two things — either more people have died, as was the sad case during the worst of the pandemic years, or people are leaving behind more money than they did before.
“To this latter point we can look at the rapid increase in house prices and understand why inheritance taxes are on the rise – the more valuable your legacy, the more tax will be charged.
“It’s understandable that some people feel frustrated by this form of taxation, and there are ways to minimise how much can be taken when you die.
“Living inheritance, money you pass down before you pass on, is the most popular way of reducing the death tax. This can be achieved through equity release, gifting, creating a trust, or even political and charitable donations.”
