Inheritance tax receipts increase by £500m from April to July

HMRC took an extra £500m in inheritance tax (IHT) receipts from April to July 2021 compared to the same period in 2020. 

Total IHT receipts over the four-month period stood at £2.1bn. There are a number of reasons that could explain this rise. 

The first of which is that the comparison period is April to July 2020. This was a time where HMRC were suffering from severe disruption as a result of the pandemic. This would have severely impacted their processes and reduced the amount of money they were able to accept from estates. 

The government have also explained that receipts from March to July 2021 were expected to be higher due to greater volumes of wealth transfers that took place during the pandemic. However, it has said HMRC would not be able to verify this until the full administrative data becomes available. 

The trend could be set to continue 

This increase also points to a concerning long-term trend. 

In the 2021 Spring budget, Chancellor of the Exchequer Rishi Sunak introduced freezes on both IHT and capital gains tax (CGT) until 2026. This means that the nil-rate band (NRB) remained at £325,000 as did the residence nil-rate band (RNRB) at £175,000.  

This sharp rise in IHT receipts suggests that the fiscal freeze is having the intended effect. It is pulling more and more people into a position where they have to pay IHT. This has been further exacerbated by asset prices swelling over the last year. 

As IHT becomes a concern for a growing section of the population, tools to mitigate it are becoming an increasingly integral part of estate planning. 

How can my clients avoid inheritance tax? 

At Stellar, we offer a range of Inheritance Tax Services that give advisers the ability to mitigate their clients’ IHT liabilities after only two years. We invest exclusively in activities that qualify for Business Relief (BR), helping advisers to guide their clients on how to create a legacy that supports all of their beneficiaries.  

One of these services is the Stellar ITS. This is a discretionary managed service designed for investors who wish to leave a legacy that is free from inheritance tax.  

When your clients invest in the Stellar ITS, we set up a discretionary portfolio in their name. This portfolio in turn invests in a diverse range of qualifying business activities through IHT Companies, ranging from Commercial Forestry to Hotels. These activities offer security and diversification, whilst seeking capital growth, in addition to qualifying for BR.  

Your clients will become beneficial owner of the shares, which are held through a nominee, so that they keep control of their capital. All of these qualifying business activities are carefully selected for both their low-risk characteristics and ability to generate capital growth.  

Your clients and their beneficiaries, regardless of their connection to the client, should benefit from 100% inheritance tax relief. This is provided that the portfolio is held for a minimum of two years, and at the time of death.  

To find out more about the Stellar ITS, click here to visit our dedicated webpage or contact a member of our expert team today on 020 3195 3500. 

Written by Jack Dobinson

Important Information

Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Prospective investors should ensure that they read the brochure and fully understand the risk factors before making any investment decision. The value of investments and the income from them may fall as well as rise and is not guaranteed. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of potential future results are not a reliable indicator of actual future results.

Stellar Asset Management Limited of Kendal House, 1 Conduit Street, London W1S 2XA is authorised and regulated by the Financial Conduct Authority.