The latest figures from HM Revenue and Customs (HMRC) show that inheritance tax receipts are bigger than ever before. A total of £7.5 billion was collected from March 2023 to April 2024, which is a £400 million increase from the same period in the previous tax year. It also means IHT receipts are on track to exceed £9.5 billion before the end of this decade.

At the moment, an estimated 4% of estates are paying IHT, but that number is set to keep rising sharply in the coming years. According to the Institute of Fiscal Studies (IFS) the proportion of deaths resulting in inheritance tax is set to grow to over 7% by 2032–33. And over the same period, the IFS says the number of people affected by inheritance tax will be still larger. It estimates that by 2032–33, one in eight people (12%) will have inheritance tax due either on their death or their spouse or civil partner’s death.

So why is IHT continuing to affect more and more people? One answer is fiscal drag. The main IHT threshold, the nil-rate band, has failed to keep up with inflation, and has been stuck at just £325,000 since 2009. When inflation is factored in, it would suggest that the nil rate band is closer to having reduced by 40%. As a result, people who wouldn’t ever have imagined themselves with an estate large enough to trigger IHT have found themselves with precisely that, often because their home has increased in value over the last two decades or so.  

According to the UK House Price Index, published by HM Land Registry, the average house price in London stood at £518,000 in January 2024, while the average house price across the entire UK stood at £299,000. It’s not surprising, then, that many people who don’t necessarily consider themselves to be wealthy are still at risk of being caught up in the IHT trap.  

IHT is a growing concern among UK public

And while many people are unaware of the risk of IHT on their estate, it’s clearly become a concern for more people, many of whom are struggling to find out what their options are. In the last two years, according to Google the number of people searching “how to reduce inheritance tax” has increased by a startling 22%. There’s also been a 22% increase in searches for “how to minimise inheritance tax”, and a staggering 50% increase in the number of people searching “how to avoid paying inheritance tax”.

Fortunately for those with concerns, IHT is a tax that most people can look to mitigate or eliminate completely with some careful and well-considered estate planning. We can help support you and your clients with a comprehensive suite of client planning scenarios that identify some of the most common challenges clients can face when it comes to dealing with IHT and estate planning. We can also help with client illustrations that show how an IHT liability could be potentially reduced or even eliminated after just two years. So it’s never too late for a client to start making plans to protect the value of their estate, and ensure more of their inheritance goes to their loved ones, as intended.  

At Blackfinch, we want to encourage more advisers to think of IHT as an advice opportunity, and to aim to have productive conversations with their clients about IHT, even those clients who think they don’t need to worry about it. Not only are the risks of ignoring estate planning too great, but there’s also a good chance they will thank you for bringing it to their attention.

Blackfinch Adapt IHT Service

Investments in the Blackfinch Adapt IHT Service can qualify for up to 100% relief from IHT after just two years, provided it is still held at the time of death. Visit the investments page to create an online illustration or apply online.

Or, to find out more about the Adapt IHT Service, download the brochure.