Inheritance Tax Liabilities Pass £7 Billion In Complex Planning Landscape

Inheritance Tax liabilities have passed £7bn for the first time, according to new HMRC figures out today which show the growing pressure on families, business owners and high-net-worth individuals.

The latest Inheritance Tax liabilities statistics show that tax liabilities created in respect of the 2023 to 2024 tax year reached £7.03bn, up £330m, or 5%, on the previous year.

The proportion of UK deaths resulting in an IHT charge also increased to 4.72%, the highest level since 2006 to 2007, although the total number of taxpaying estates fell by 1,100 to 30,400.

The average IHT bill paid by taxpaying estates increased by 9%, rising from £212,000 to £231,000.

The figures also show that the combined value of Agricultural Property Relief and Business Property Relief set against assets rose to £5.96bn, up 13% on the previous year. The value of BPR rose by 15% to £3.85bn, while APR rose by 9% to £2.11bn.

Andrea Jones, Partner and National Head of Private Client Advisory at Irwin Mitchell, said: “Inheritance tax has passed another major milestone, but the real story is the growing complexity families now face."

“For higher-value estates, the figures show how quickly the position can change. Once an estate exceeds £2m, valuable allowances start to taper away, which can leave families facing a much higher effective tax burden than expected."

“The figures also provide an important pre-reform benchmark for business and agricultural reliefs. Almost £6bn of relief was set against assets in the latest year, showing how central these reliefs have been to succession planning."

“But the landscape has now changed. Families with businesses, farms, AIM portfolios or other qualifying assets should not assume plans made under the old rules will still achieve the same result."

“With unused pension wealth also due to come into scope from 2027, estate planning needs to be reviewed now, not left until it’s too late.”