News & Articles


HMRC targets inheritance tax as property prices increase

by Gina Mills

Recent data from the insurer NFU Mutual show that HM Revenue & Customs has recovered a record £326m, through increasing its investigations into inheritance tax (IHT) during 2022.

Rising inflation means property values have increased, with the effect that more people are now subject to the IHT threshold, currently £325,000 (additional rules may apply.) According to a report in The Times (5 January 2023), one in 42 UK homes is now worth £1m or more.

HMRC also has a dedicated team which targets wealthy individuals, defined as people in Britain with an annual income of over £200,000, or assets above £2m. When these individuals pass away, it goes to follow that their estates will be subject to additional scrutiny.

What is the current rate of inheritance tax?

There is normally no IHT to pay if your estate’s value is below £325,000, or you leave everything over this amount to your spouse, civil partner, a charity, or a community amateur sports club.

Otherwise, your estate will be taxed at 40% on anything above £325,000 when you die. This figure is reduced to 36% if you leave at least 10% of the estate value to a charity in your will, after deductions.

Can you change your inheritance tax threshold?

Giving away your home to your children (including foster, adopted, or stepchildren) or your grandchildren when you die means your IHT threshold can increase to £500,000.

It is also worth noting that if your estate is worth less than your threshold, and you are married or in a civil partnership, any unused threshold can be added to your partner’s when you die.

Additional rules and reliefs can apply. For example, IHT is not usually paid on small gifts, (up to £3,000 per tax year) or gifts from your income. Certain reliefs, including Business Relief, can allow some assets to be passed on either free of IHT, or with a reduced bill.

The importance of inheritance tax planning

IHT is often seen as a tax on the super-rich. However, the rise in estate values means you don’t have to own a mansion and acres of land to be affected. This can result in grieving families being faced with a sizeable tax bill when a loved one passes away.

It is therefore worth thinking about the potential impact of IHT on your family and/or other beneficiaries in good time, so you can order your affairs and plan before you die to reduce, or in some cases even remove, the need to pay it.

Along with giving gifts throughout your lifetime, creating or re-organising wills and trusts can aid your personal IHT planning process. To reap maximum benefit, you should ensure that these are structured in the most tax-efficient manner possible.

Not only can our specialist advisers assist with IHT planning, but we also offer a Tax Investigation service, which covers you against the cost of professional fees associated with an official enquiry into your tax affairs or the inheritance tax on your estate.

Please contact Gina Mills at if you would like to discuss your circumstances further.

Find out more
If you have any questions about the above, or would like more information specific to your circumstances, please enter your email address below and we will get in touch:
Photo of Gina Mills
Gina Mills
Tax Manager | Southend

Our Accreditations and Memberships