Households across the United Kingdom are being strongly advised to ensure they complete a crucial and straightforward administrative step with HM Revenue and Customs (HMRC) to prevent paying unnecessary inheritance tax (IHT).
Inheritance Tax Receipts Climb to £5.8 Billion
The urgent warning follows the release of official HMRC data showing that IHT receipts reached £5.8 billion in the first eight months of the current tax year. This staggering figure represents an increase of £84 million compared to the same period last year.
Financial experts point to rising asset values, particularly in the property market, as a primary driver behind these steep figures. As house prices increase, more estates are being pushed over the IHT threshold, which has been frozen until at least 2028.
Rising Property Values Drag More Families into Tax Net
Chris Ball, chief executive of financial advisory firm Hoxton Wealth, confirmed a significant surge in enquiries about financial planning. "We are definitely seeing a marked increase in interest around life insurance and estate planning," he stated.
"Rising property values have pushed more families into the inheritance tax net, and people are realising that their loved ones may face a significant bill," Ball explained. He highlighted that life insurance can offer a relatively straightforward solution to create a fund to meet the potential liability, without forcing the sale of assets or disrupting long-term family plans.
Deadline Warnings for Self-Assessment Taxpayers
This inheritance tax alert coincides with the self-assessment tax return deadline period. Last year, approximately 40,000 taxpayers submitted their returns between Christmas Eve and New Year's Day.
Emily Coltman FCA, chief accountant at FreeAgent, issued a separate warning to small business owners and the self-employed, a group she said has been "hit hard" by rising prices, record inflation, and tax increases. "It is more important than ever for SMEs to avoid unnecessary and avoidable costs," she emphasised.
Coltman stressed that missing the self-assessment deadline can lead to immediate financial penalties. "The last thing businesses need at this difficult time is to incur an automatic £100 fine for missing the deadline, but it is also important that they pay their tax on time too," she cautioned.
The overarching message from financial professionals is clear: proactive engagement with tax planning, whether for personal estates or business accounts, is essential to navigate the current economic climate and prevent unexpected, costly bills from HMRC.
