I recently wrote a blog about the new Residence Nil rate band allowance that was introduced by the government back in April this year and how this could potentially reduce homeowners' tax bill. In light of the figures recently released by HM Revenue & Customs relating to the amount of Inheritance Tax people paid for the year 2016/17, I am sure people could be taking more steps now to avoid or reduce their tax bill.
Information published by HMRC shows the the amount of Inheritance Tax received by them in the tax year 2016/17 exceeded £5 Billion for the first time. These figures confirm the increasing amount of revenue received by HMRC for, what is considered by many, to be one of the most unfair taxes payable.
The payment of £5.1 Billion in the tax year 2016/17 is a rise of 9% on the previous year, when £4.7 Billion was paid to HMRC. Although the amount of inheritance tax being received equates to just 0.25% of Gross Domestic Product, it is nevertheless an easy tax for HMRC to collect.
The amount of Inheritance Tax being paid was on the increase throughout the 1980's, 1990's and first half of the 2000's, peaking in the 2007/08 tax year. A fall in the value of residential property in 2008 and 2009, combined with the introduction of the Transferable Nil-Rate Band Allowance saw a fall in Inheritance Tax to below £2.5 Billion in the year 2009/10.
Since the tax year 2009/10 the Inheritance tax being paid has been increasing year on year, and has now reached the record high of £5.1 Billion.
It will be interesting to see what impact the introduction of the new Residence Nil Rate Band Allowance will have on the amount of inheritance tax being paid and whether the increase will continue, or if the additional allowance will cause a short term dip before the increase returns once again.