Plan now for inheritance tax changes

THE INHERITANCE tax threat creeps closer, as a growing number of Brits will hand over more of their wealth to HMRC when they die.

- By HARVEY JONES

COMPLEX ISSUE Get advice to ensure as much wealth as possible is passed on

And it’s set to intensify, as a change by Chancellor Rachel Reeves comes into force in just over a year, dragging more families into the net.

From April 2027, unused direct contribution pension pots will become liable to IHT if the total value of the estate exceeds the £325,000 nil-rate band, and the £175,000 residence allowance for those passing homes to family members.

In a further blow, those thresholds will remain frozen until 2031, and figures published last week show the taxman is already reaping the benefit.

HMRC is on course to take a record £8.7billion in IHT this year, and it’s only going to climb. The Office for Budget Responsibility calculates the total haul will hit £14.5billion by the 2030/31 tax year, a rise of two-thirds in just five years.

IHT receipts have already climbed for the last four years thanks to frozen thresholds and rising stock and property markets, said David Cooper, director at retirement specialist Just Group. “Anyone concerned that their estate may be subject to IHT should get an up-to-date valuation, including an assessment of property wealth.

“Consider advice to ensure as much as possible can be passed on.”

Paul Barham, partner at Forvis Mazars, said planning ahead is essential as HMRC tightens the screw.

And gifting is one of the simplest ways to reduce exposure...