Years of frozen inheritance tax (IHT) thresholds mean more people are paying inheritance tax. We take a look at the basics of IHT and what you can do to pay less.

Inheritance tax receipts have been climbing since 2009. More recently the 2021-22 financial year saw a 14% rise. This was the biggest rise since the 2015-16 financial year.

There are two main reasons for soaring IHT receipts.

Sadly, the effects of COVID-19 are still being felt. The peaks in IHT revenue align with surges in deaths due to the virus in 2020 and 2021. But the virus hasn’t gone away entirely and is sadly still taking lives.

But COVID-19 isn’t solely to blame. The government’s decision to freeze IHT thresholds has meant more estates have slipped over the line and become liable.

Some refer to this as a ‘stealth’ tax because more people will fall into it without realising it due to the threshold freeze over the years.

What’s likely to be the biggest driving factor is property prices. As prices increase, which they have done in recent years, property, which forms part of an estate, could mean the estate becomes liable to more tax.

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