HM Revenue & Customs collected a record £4.56 billion in inheritance tax in 2015/16. This represents a 21.6% increase from the £3.78 billion collected the previous year and a 70% increase from 2010/11 when HMRC took in £2.69 billion, according to the Office for National Statistics.
HM Revenue & Customs says the rise is due to increases in the values of assets left in estates over time and due to the fact that the number of deaths between December 2014 and March 2015 was significantly higher than in the same period in previous years.
With the increasing value of property, it is no longer just the large windfalls of inheritance from estates that are being taxed. As the threshold has stayed at a fixed rate for almost seven years, individuals who were not originally intended to be taxed are now facing significant bills because of the rise in property prices, particularly in London and the South East of England.
It should be clearly understood that the government intends to further boost revenues from inheritance tax and recently announced plans to introduce increased probate fees in April next year. The increased fees will mean estates worth over £2 million will be required to pay £20,000 for undergoing a probate instead of the current £215. The planned new fees do not reflect any real difference in the costs to the probate service of handling probate on a large or small estate. In practical effect, they amount to an additional inheritance tax on larger estates.