The Government will collect more money from inheritance tax with figures “increasing in a few years time”, claimed Duncan Simpson. The Research Director at Taxpayers’ Alliance revealed this increase will be triggered by “demographic changes” in the British population. Mr Simpson told Express.co.uk: “Ultimately the overwhelming majority of states aren’t liable or rather subject to inheritance tax. But it’s a growing portion. This year it is forecast to be £5.3billion.
“It’s going to stay roughly around that sort of level and then increase in a few years time, or at least according to the latest OBR (Office for Budget Responsibility) forecast.
“So it is a big chunk of cash which HMRC receives from inheritance tax.”
According to OBR’s ‘Economic and Fiscal Outlook’ report released in March 2019, the Government is forecast to collect £6.3billion from inheritance tax in 2023-24.
This is a £1billion increase from last year, 2018-19, with HMRC collecting £5.3billion from inheritance tax.
The figure of £5.3billion is set to remain the same for next year, 2019-20, but is forecast to increase to £5.4billion in 2020-21.
HMRC is then expected to collect £5.6billion in 2021-22 and £5.9billion in 2022-23, according to the report.
Whether you leave all of your assets to one person, or choose to divide aspects of your estate between different friends and family members, tax requirements may mean they end up with less than you had hoped they would.
Inheritance tax in the UK may be required to be paid, once the time comes. The gov.uk website explains that this is normally not required if the total value of your estate – which includes money, possessions, and property – is less than the £325,000 threshold.
Additionally, leaving the entirety of your estate to your spouse, civil partner, a charity or a community amateur sports club, means inheritance tax would normally not need to be paid – regardless of whether it’s greater than the current threshold or not.
The threshold may increase in some circumstances, such as if you give your home to your children or grandchildren – when it would rise to £475,000.
The standard inheritance tax rate is 40 percent, and this is only charged on the remaining part of your estate above the threshold.
Of course, life insurance payouts are not made until after the policy-holders death – which may mean some people question whether it’s included in the estate value or not.
If your life insurance policy provides a lump sum or a regular income to your beneficiary or beneficiaries, then there is usually no income or capital gains tax payable. However, it may be that the payout is subject to inheritance tax.
MoneyExpert.com explained: “When you have a life insurance policy, either when you start it or during the policy term, you’ll have the option of doing what is known as writing the policy in trust at no extra cost.
“When you write a life insurance policy in trust, because the payout does not go to your legal estate, its value will not count towards the inheritance tax threshold and so the entire sum will go to who it is intended to go to.”