Chancellor, George Osborne, said last month in his Autumn Statement that the Inheritance Tax (IHT) threshold would remain unchanged at £325,000 throughout the 2013/14 and 2014/15 tax years.
The threshold at which people start to pay IHT will likely increase just weeks before the date of the next general election. The limit is planned to go up by £4,000 to £329,000 in 2015/16 and will take effect on 6 April 2015. Until this time, families will pay an extra £80 million in IHT, according to Treasury data.
Latest figures show HM Revenue & Customs (HMRC) recorded a 7% year-on-year rise in the volume of Inheritance Tax (IHT) receipts to £2.72 billion in 2011/12. The taxman also registered an increase in the number of people paying the tax to 20,000 in 2012, up from 17,000 in the previous year. Many people, including those who stand to inherit even very modest houses, will be drawn into the IHT net as a result of the two and a half year delay and even the 1% increase in 2015 is expected to be far below the inflation rate of that year.
The nil rate band threshold will be well short of the £1 million level that Osborne pledged in Opposition at the Conservative Party conference in 2007, and this rise will be the first increase by the Coalition Government. Osborne froze the nil rate band for four years in July 2010.