IHT expected to raise an extra £900 million by 2022 – but how?

It is forecast that between now and 2022, £900 million more in Inheritance Tax (IHT) will be collected than previously anticipated.

The news comes after the Office for Budget Responsibility (OBR) published a series of revised IHT forecasts following the Autumn Budget announcements on Wednesday 22 November.

Back in March, the OBR had estimated that the Treasury would collect £32.4 billion in IHT between the years 2016 and 2022.

But now, the OBR has revised that forecast upwards by approximately £900 million.

In its new set of figures, the OBR has forecast receipts of £5.3 billion in IHT during 2017/18 alone – up from a previous estimate of £5 billion.

Commentators have voiced concerns that an increasing number of estates are liable to pay the tax – often due to the UK’s rapidly-rising property prices and a threshold that has remained static.

If the new Residence Nil Rate Band intended to give a threshold of £1 million on a property passing from parent to child has been factored into these projections, then clearly this is not going to achieve its aim of enabling family homes to pass unscathed from one generation to the next.

Alongside this, the OBR’s report cites “population projections” and “higher expected mortality rates” as the key reasons behind its revised forecasts for IHT receipts in the coming years.

More of us are going to die during the period, it seems, and that alone will account for increased tax receipts. Something of an unexpected bonus for the Revenue, one might say, and good news for those of us who survive, one hopes.

Carter Lemon Camerons LLP Solicitors is a City law firm which provides Wills and probate services with a personal touch to its clients – that go beyond the simple drafting of documents. Unlike many City practices we are happy to act in smaller private legal matters, bringing the same care and consideration as we do to large commercial matters. If you require advice on setting up an LPA, please contact Neil Acheson-GrayIan West or Michael Woodward.