“Taking money from a grieving family who are burdened with the loss of a loved one and sorting their affairs, sounds like something a villain from a Dickensian novel would do. Unfortunately, it’s a very real activity in the modern day and one that is reaping more and more revenue for the government.
“Inheritance tax in March 2019 jumped substantially, a 44.4% increase from the previous month, and the government is at a loss for why. In fact receipts for April 2018 to March 2019 are 3.1% higher than the same period last year and the 18/19 tax year show that IHT receipts are at its highest level both in annual revenue and as a proportion of GDP.
“We may see the tax take fall somewhat next month as on April 6th the government increased the residence nil-rate-band (RNRB) to £150,000, which gives people an additional threshold before IHT becomes due on their estate and which they say will remove some of the IHT sting.
“However, research from Big Window for Quilter* shows that despite the residence nil rate band being in effect since 2017, just 41% of people are aware of this complicated part of the inheritance tax landscape. Further to this, under half of respondents were aware of other fundamental inheritance tax rules such as the £3,000 gifting limit (46%) or the £325,000 nil-rate-band (43%).
“The very fact that people have to be asked which, of numerous complex allowances are available to them is a terrible sign itself. And it is made worse by the woefully low proportion that are aware of them. Government claims that it has given the public all the tools it needs to navigate this tax system, but it’s as complex as assembling flat pack furniture with instructions written in a foreign language.
“In the modern world families are increasingly becoming more complex and we need a tax regime which functions with this in mind. The RNRB depends on a number of factors, including your marital status and who inherits the family home. These kinds of rules should be rethought so people have the freedom to gift to whoever they want and are not constrained by antiquated societal rules. A simple IHT regime gives people far greater opportunity to best plan their estates and make the most difference to future generations.”
*A national representative survey of over 2,000 UK adults