According to HMRC data, Inheritance Tax (IHT) receipts have fallen for the first time in 11 years. The amount of IHT collected in the 2019/20 tax year decreased by £223m (4%) to £5.2bn. The primary driver behind the fall is likely to have been the introduction of the main residence nil-rate band (RNRB) in 2017/18.

The RNRB is an additional allowance available if a person’s estate includes their home and is left to their direct descendants, such as children, stepchildren or grandchildren, and currently stands at £175,000. When added to the nil-rate threshold (£325,000), this could give rise to an overall IHT allowance of £500,000, unless an estate exceeds £2m, at which point the RNRB starts to reduce.

If you’re married or in a civil partnership, any unused threshold can be added to your partner’s threshold when you die, giving a total IHT allowance of up to £1m. Beyond these thresholds, IHT is usually payable at 40%.

Rishi Sunak may decide to alter IHT rules to help fill the hole in his budget left by the furlough scheme. We will keep you posted with any updates and work with you so that you can pass on assets in the most effective way.

The value of investments and income from them may go down. You may not get back the original amount invested. Inheritance Tax Planning is not regulated by the Financial Conduct Authority.