Almost £5 billion was raised from inheritance tax (IHT) in the past financial year new government figures reveal - a record intake from the often controversial tax.
Rising property prices and strong performance by the stock market have been cited by experts as reasons why the government raised £4.84 billion in IHT during the 2016/17 tax year.
This is 4% higher than the previous year - when £4.67 billion was raised - according to official statistics released by HM Revenue & Customs (HMRC).
While inheritance tax is often a contentious subject, it continues to represent less than 1% of all taxes raised in the UK.
However, preliminary data for the first three months of the 2017/18 tax year shows a 22% increase in IHT tax receipts when compared to the same period last year.
‘Paying inheritance tax in many cases is largely a result of a lack of planning’
Inheritance tax is typically charged at a rate of 40% on all assets over £325,000, with any wealth below this level not subject to any tax.
However, since 6 April 2017, couples have also been allowed to pass on properties worth up to £1 million free of taxation. Read the full details in our Guide to the new inheritance tax rules.
Les Cameron, inheritance expert at Prudential, says: “Rising property prices have been a factor in the rising IHT receipts.”
But he adds that many people can reduce their IHT liability: “Paying inheritance tax in many cases is largely a result of a lack of planning and there are various methods which can be used to reduce a person’s IHT liability.
“These methods range from making gifts, using the various available exemptions, to more sophisticated financial planning using different investment types or trusts. To make sure that their family receives more of their money, people need to gift more regularly or start gifting their wealth earlier in their lives.”