Act now before Budget

FIVE-MINUTE GUIDE TO... INHERITANCE TAX ON PENSIONS

- By Harvey Jones

PLAN: Protecting cash for the future

HMRC collected £4.4billion in inheritance tax (IHT) between April and September, up from £4.3billion a year earlier.

The Treasury is on course to rake in around £8.8billion for the full year, another new record, up £600million on last year’s £8.2billion haul.

While house prices and share values steadily rise, the nil-rate band, which allows estates worth up to £325,000 to escape IHT, hasn’t increased since 2009, while the £175,000 residence allowance has also been frozen since its launch in 2017.

Both will remain frozen until 2030, dragging thousands more households into the net as asset values rise.

Andrew Tully, technical services director at Nucleus, said IHT receipts have grown more than 50% over the last five years, and the trend will continue.

“Freezing nil-rate bands, rising property values, and planned cuts to agricultural and business reliefs from next April are all pushing up bills.”