On 31st July HMRC published its latest inheritance tax statistics. It's not often that I would say that a statistical report is interesting, however this one does point to some key societal trends.

The report confirmed that the number of deaths resulting in a charge to inheritance tax (IHT) in the 2021/22 tax year rose by 3%. The actual number of taxable estates was 27,800, which accounts for around 4.4% of total deaths in the year.

In terms of value, HMRC received just under £6 billion. This is an increase of 4% from the previous tax year. Regional discrepancies are also quite stark with estates in London and the southeast making up 45% of the total IHT charged across the UK. £1.4 billion was charged in the southeast (slightly more than London).

For taxpayers, the most significant relief was (perhaps unsurprisingly) the spousal exemption, which provided relief for £15.5 billion in IHT, which is actually less than the previous tax year. One does have to wonder if this is as a result of the rise in cohabitation, meaning that fewer couples see the benefit of this relief. People with a martial status of "other" (meaning single or divorced) amounted for 36% of all taxable estates.

Agricultural and business property relief provided savings of £4.4 billion, which was also a decrease on the previous tax year. Again, it is likely that this reflects the diversification which farmers have undertaken since the withdrawal of EU subsidies, many of which do not qualify for agricultural relief or business relief for IHT purposes.

The charity exemption amounted to IHT savings of £2.1 billion. The relief was utilised by 9,780 estates (around 35% of all taxable estates) and an increase on the previous tax year. Use of this relief is something we promote to clients where they're estate is liable to IHT and are contemplating charitable gifting, either during their lives or on death. It often does not significantly change the amount received by family, but does take funds out of HMRC's pot and moves it to the charity instead, so always worth contemplating.

Finally, the residential nil rate allowance (now in its 5th year) saw a healthy uptake, with 25,800 estates claiming the relief. This resulted in IHT savings of £6.5 billion. This was a rise on the previous tax year, and possibly shows a wider understanding of this unnecessarily complex relief, so that wills and estates are now administered to take pull advantage of the relief where it is available.

If you would like to review HMRC's report in full, please click here.

If you would like help reviewing your inheritance tax position then please contact Ashley Minott on 01494 893518 or by email.