According to figures published by the Sunday Telegraph, thousands more families will be required to pay inheritance tax (IHT) this year as an improving economy and rising house prices push them above the £325,000 threshold.
The Telegraph based its numbers, which were independently verified by the Office for Budget Responsibility (OBR) on analysis of Office for National Statistics (ONS) forecasts for death numbers and OBR projections of estates expected to become liable for the tax.
According to the newspaper, a total of 35,611 deaths will result in estates being charged IHT in 2014-2015, up 35 per cent on the 26,337 recorded during the last tax year.
Meanwhile, in 2015-2016, the number of estates liable for IHT will rise to 43,811 and, by 2016, the number of families who must pay the death tax will have risen by 66 per cent in two years.
Inheritance tax is levied at a rate of 40 per cent on the value of an estate above a threshold of £325,000. Married couples can double the allowance by passing on assets to their children or other relations.
In addition, an individual can currently establish several trusts and, as long as they are set up on different days, each has it own £325,000 nil rate band. However, HM Revenue & Customs has recently confirmed new proposals for a single nil rate IHT tax band for trusts, which will come into effect on April 6 2015 but will not affect trusts set up before June 6 this year.
Analysts have described the proposals as ‘pragmatic’ and have said that as long as individuals take advice on estate planning, trusts will continue to offer advantages.