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Inheritance Tax Recovery Reaches £3.4 Billion

In a bid to keep up with the latest news regarding inheritance tax and death duties, we came across new figures published in the Solicitors Journal, noting that HMRC recently revealed it has received more than £3.4 billion from inheritance tax (IHT) and death duties in the last 12 months.

The official figures represent a six-year high, and suggest that last year more households were caught in the IHT 'tax net'; prior to this figure HMRC received £3.1 billion. This is an increase of 8.6%, meaning that the amount of IHT received has nearly reached similar levels to those recorded pre-recession.

The IHT threshold has been frozen at £325,000 since 2009 but the higher amount recorded for 2013 can be largely attributed to the rise in house prices, HMRC noted. NFU Mutual personal finance specialist Stephen Berry stated that IHT has begun to affect millions more people thanks to "the rise in house prices" – in 2008, HMRC claimed £3.8 billion, which was a record amount.

This year's amount of IHT was close to the predicted £3.5 billion from the Office for Budget Responsibility. The Conservatives have promised to increase IHT allowances in the general election next year, thus alleviating the pressure of paying IHT for a number of people. If the threshold remains the same, however, research from the Institute for Fiscal Studies suggests that inheritance tax receipts will reach an astounding 45-year high.

In 2009-2010 the figures did drop slightly (to £2.4 billion) due to the government allowing individuals to transfer their allowance to their partner after death.

What is your opinion on IHT and the current threshold? Do you believe it should be increased?