By Legal Futures Associate Tower Street Finance
New figures released by HMRC revealed that inheritance tax payments during 2020-21 totalled £5.4bn – increasing by 4% (£190m) on the last tax year.
This has affected 33,000 people who have been hit with a tax bill, which the Office for Budget Responsibility say is up by a third, with the average payment around £160k.
If the IHT threshold stays as it is (which is the current plan until 2026) the Government will bring in an extra £1bn mainly based on the fact that the tax band hasn’t been increased since 2010, and house prices have and continue to rise.
However, there are further rumours that Rishi Sunak may consider hiking up inheritance tax as the country’s ‘covid bill’ stands at around £400bn.
Tower Street Finance’s Dicky Davies said: “We know from our research that almost 90% of people who are expecting or are in the process of receiving an inheritance don’t know that the executor is responsible for settling the HMRC bill.
“And because the estate proceeds can’t be distributed until this is paid, it comes as both a shock but also can cause frustrations for the beneficiaries if there’s a delay in them receiving their inheritance.
“We have a unique product that can help – our IHT Loan – which is a no risk product for executors to allow them to ‘unlock’ estates where IHT is due.
“We’ve also just launched another product for executors and personal representatives who have other costs to cover before the estate can be released. Estate Expense Funding helps fund the expenses they have to cover as part of their duties such as professional fees, funeral expenses and house repairs.”
And just to end on a lighter note given that 8 August is International Cat Day – created to raise awareness and help and protect our feline friends.
According to research carried out by life insurance provider DeadHappy, Brits leave on average £60,000 to their pets in their wills.
They are considered to be personal property under HMRC rules, but because they can’t manage an estate the cash can’t be left directly, however a pet trust can be set up to care for them after the owner dies.
One cat who was very well looked after by her owner was Choupette – designer Karl Lagerfeld’s beloved pet. Not only did he hire two maids to look after her, when he died in 2019, he left her £153m in his will.