{"id":167534,"date":"2025-12-04T10:24:12","date_gmt":"2025-12-04T10:24:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/167534\/"},"modified":"2025-12-04T10:24:12","modified_gmt":"2025-12-04T10:24:12","slug":"will-you-pay-inheritance-tax","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/167534\/","title":{"rendered":"Will you pay inheritance tax?"},"content":{"rendered":"

Last year, the total amount of inheritance tax paid stood at \u00a38.3 billion a year but, by 2030\/31, it\u2019s expected to balloon to \u00a314.5 billion, according to Budget documents.\n<\/p>\n

That means that even though inheritance tax wasn\u2019t significantly increased in the Budget \u2013 as many feared \u2013 more families are likely to be affected.
\nFind out what\u2019s happening and how you can prepare. <\/p>\n

What\u2019s on this page?\u00a0<\/p>\n

Budget papers reveal more families will pay IHT <\/a>
\n Why IHT receipts are ballooning <\/a>
\n What you can do <\/a>
\n What to think about first <\/a><\/p>\n

Budget papers reveal more families will pay IHT <\/p>\n

There were no big changes for inheritance tax in this year\u2019s Budget. The only significant news for most people was an extension to the freeze on nil rate bands for a further year, to 2031. <\/p>\n

This includes the standard \u00a3325,000 nil rate band and the \u00a3175,000 residence nil rate band which can be claimed if you are passing a family home to direct descendants.\u00a0But while feared restrictions on the amounts that can be gifted IHT-free<\/a>\u00a0didn\u2019t materialise, the Budget documents revealed a huge increase in predicted IHT receipts.<\/p>\n

And it\u2019s not just individual tax bills that are set to rise. More families can also expect to face a bill when loved ones die. This year the number of taxable estates is expected to be 32,200, which is 9,000 fewer than previously predicted, and equivalent to about 1 in 20 estates. <\/p>\n

That will rise to 63,100 by 2030\/31, which is about one in 11 estates, according to the Office for Budget Responsibility. <\/p>\n

James Scott-Hopkins, founder of wealth management firm EXE Capital Management, says: \u201cWe know that the number of families being dragged into the inheritance tax net will [almost] double by 2031, with the OBR forecasting that by the start of the next decade, 9.3% of all deaths will be subject to IHT.\u201d <\/p>\n

Why IHT receipts are ballooning <\/p>\n

Rising IHT bills have largely been the result of frozen thresholds and rising asset prices, including family homes.
\nScott-Hopkins says: \u201cReceipts are already at record highs because of decades of house price rises and the insidious freezing of the NRB threshold, which has been stuck at \u00a3325,000 since 2009. In that time, the consumer prices index (CPI) has risen by approximately 60%, the average house price by 73%, and the average portfolio\u202f(made up\u202fof equities and bonds) by 139%.\u201d\n<\/p>\n

Although the nil rate band has been the same since 2009, the additional threshold (the residence nil rate band) was introduced in 2017 at a rate of \u00a3100,000, and increased each year until it rose to its current rate of \u00a3175,000 in 2020. But since then, the number of estates being affected and the amounts being paid have been rising steadily.\n<\/p>\n

The amounts paid\u00a0are expected to rise even faster in the coming year as upcoming changes (announced in last year\u2019s Budget) come into effect.<\/p>\n

\nMadeleine Beresford, partner at TWM Solicitors, says: \u201cIn addition to the fiscal drag we\u2019ll see from the extended freeze to the nil rate band, over the next six to 18 months we will also start to see the impact of last year\u2019s changes in terms of the restrictions on agricultural and business property relief, and also the pensions being brought into the IHT net.\u201d
\nFrom 2027, unused defined contribution pension pots will be treated as part of the estate for IHT purposes.<\/p>\n

\nBeresford adds: \u201cThe pensions point is hugely significant, not only because of the tax on the pension itself, but the fact it takes many people over the \u00a32m threshold for the residence nil rate band.\u201d RNRB is withdrawn at a rate of \u00a31 for every \u00a32 over \u00a32m, which means that some estates going over that level could face an effective tax rate of up to 87%.<\/p>\n

Rob Morgan, chief investment analyst at Charles Stanley, adds: \u201cOnce a tax reserved only for the nation\u2019s wealthiest families, IHT has now planted its flag firmly in Middle Britain thanks largely to a potent mix of house price growth, frozen thresholds, and soon the inclusion of pension pots in the calculations.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Last year, the total amount of inheritance tax paid stood at \u00a38.3 billion a year but, by 2030\/31,…\n","protected":false},"author":2,"featured_media":167535,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,109113,111,139,69,244,245],"class_list":{"0":"post-167534","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-finance","10":"tag-inheritance-tax-2030brwill-i-have-to-pay-more-iht","11":"tag-new-zealand","12":"tag-newzealand","13":"tag-nz","14":"tag-personal-finance","15":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/167534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=167534"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/167534\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/167535"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=167534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=167534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=167534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}