IHT Liabilities

In 2020-2021, Inheritance Tax liabilities soared by 16% (£800 million), reaching a record £5.76 billion, driven by pandemic effects and rising asset values. The UK also witnessed an 18% increase in deaths during this period.

IHT Charge

In 2020-2021, 3.73% of UK deaths incurred Inheritance Tax, slightly down from the previous year, with stability attributed to the Residence Nil-Rate Band introduction.

Average Effective Tax Rate

In the 2020-2021 tax year, the average effective tax rate for 27,000 taxpaying estates was 13%, influenced by estate size and tax-free allowances. Larger estates faced higher AETRs, reaching 25% for those between £2 million and £7.5 million.

Composition of Estate

Estates below £1 million are predominantly comprised of residential property and cash, while those exceeding this threshold tend to include more securities and diverse assets.

Chargeable Trusts & Value

The net chargeable value of taxable transfers into trusts remained stable at approximately £60 million, with a peak at £128 million in 2019-2020. Ten-year anniversary charges for trusts reached nearly £3.7 billion in 2017-2018 but have since declined.