At the end of every July HM Revenue & Customs publishes its analysis of inheritance tax statistics. The latest information (July 31, 2024) states “in the tax year 2021 to 2022 4.39 per cent of UK deaths resulted in an IHT charge”. In your article “Would you leave your children out of your will?” (FT Money, February 1), it states “Today around 4 per cent of estates are affected by IHT . . .”
This is misleading, because the figure of 4.39 per cent is almost three years out of date and is historical. If most deaths are of a surviving couple where the IHT-surviving spouse exemption has been used on the first death, it is reasonable to suggest that in 2021/22 about 8-9 per cent of the population was affected by a potential IHT charge.
In HMRC’s publication with the last Budget statement (“Technical consultation — Inheritance Tax on pensions: liability, reporting and payment”), it is stated that “in the coming years, fewer than 10 per cent of estates annually are forecast to have an IHT liability.” I suspect this is a conservative (ie underestimated) figure, but no basis for this forecast is given.
For some politicians to suggest that most farmers will have £3mn of IHT exemptions is also misleading: the IHT residence nil rate band of £175,000 reduces pound for pound once an estate reaches £2mn in value. A farmer’s deadstock (eg tractors) is likely to be valued at tens of thousands of pounds. Inheritance tax liability is going to cause unanticipated distress to many more families than is currently acknowledged.
Peter Nellist
Exeter, Devon, UK