32% jump in number of local authorities where homebuyers are automatically hit with inheritance tax
Recent analysis has shown that despite rising inheritance tax thresholds over the past 20 years, rapid house price growth has led to a significant increase in the number of homeowners affected by inheritance tax. Currently, 36% of local authorities in the UK now see homebuyers automatically liable to pay inheritance tax based on the value of their property alone, compared to just 4% two decades ago.
Sir Keir Starmer is set to present his government’s first Autumn Budget on October 30th, warning that it will be ‘painful’ for many. This has sparked expectations of new taxes and potential increases, with inheritance tax reforms widely anticipated.
Yopa’s analysis of HMRC data highlights a noticeable rise in inheritance tax receipts. Two decades ago, during the 2004-2005 financial year, HMRC collected £2.9 billion annually from inheritance tax. Steve Anderson, Yopa’s National Franchise Director, commented:
“Over the past 20 years, escalating house prices have not only increased the government’s revenue from stamp duty land tax but also from inheritance tax, which has consistently risen alongside property values.
With the upcoming Autumn Budget predicted to be tough on UK taxpayers, it’s possible that the inheritance tax burden could increase further. So far, the only official mention of inheritance tax from the Labour manifesto concerns closing offshore trusts to prevent tax avoidance, which suggests the average homeowner may not be significantly impacted.
However, any changes in inheritance tax law would likely require substantial revisions, and it remains unclear what the final outcome will be.
Nevertheless, as house prices continue to stabilize, many more homeowners could fall within inheritance tax thresholds even without any legislative changes.”
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