Figures released by HM Revenue and Customs (HMRC) show that inheritance tax receipts (IHT) hit £5.7bn in the eight months from April to November 2024.

This figure was £600m higher than the same eight months last year and continued the upward trajectory over the last two decades.

Last full tax year inheritance tax raised £7.499bn, and currently just one in 20 estates is liable, but the Government suggested that this will increase to one in 10 estates by 2030.

Reaction:

Nicholas Hyett, investment manager at Wealth Club:

“Inheritance tax continues to be the gift that keeps on giving, at least as far as the Government is concerned.

“Yet again HMRC is increasing the amount that it’s milking from the estates of the recently deceased.

“Decades of rising property prices have been a major driver, pushing estates above frozen nil rate bands, and from April 2027 pension pots will fall into the taxman’s net as well meaning  even more families are dragged into paying this most hated of taxes.

“These changes will harm many, many businesses and do not reflect the Governments objectives to get the economy moving.

“All Government’s need to balance short and long term priorities.

“Short term financial gain may add pounds in the pocket now, but could easily lead to long term pain if people are put off saving to support themselves in retirement and businesses decide not to invest or shut up shop altogether.”

Simon Martin, head of UK technical services at Utmost Wealth Solutions:

“The IHT snowball continues to gather growing momentum as the extended freeze in Inheritance Tax thresholds and rising property prices looks set to continue delivering record tax hauls to the Treasury.

“Changes to the IHT and non-dom regime announced at the Autumn Budget will spread the net further, leading to more and more estates being caught up in the tax as the Treasury clamps down on certain areas.

“While Inheritance Tax is often perceived as one of the more unpopular taxes, there are steps that can be taken to mitigate its impact, and this Budget will no doubt create the stimulus for people to urgently assess their circumstances.

“We expect to see a spike in demand for professional advice around inheritance tax as individuals reconsider their plans, which could see strategies shift to lifetime gifting earlier and more often to individuals or trusts and perhaps spending their pension pots.

“There could also be increased interest in insurance policies and death benefits that can protect individuals against these rising IHT liabilities.”

Stephen Lowe, group communications director at Just Group:

“Inheritance Tax is set for another record year, with receipts already over £550m ahead of the total through the same period in 2023/24.

“With the thresholds frozen for a further two years by the Chancellor in the Budget and further exemptions removed, IHT is set to deliver an increasing tax-take for the Treasury.

“With the number of deaths subject to IHT now forecast to reach nearly 10% by the end of the decade, it underscores the importance of people staying on top of the value of their estate.

“As a starting point, we encourage people to make sure they have an up-to-date valuation of their estate to help them understand if they are likely to incur IHT.

“Estate planning is complex and professional financial advice can be immensely helpful for people who want to manage their estate efficiently and pass on the maximum inheritance to loved ones.”

One person in the UK develops dementia every three minutes. Yet relatives can’t just walk into a bank and access your money, even if it is to pay for your care. Unless you’ve a Power of Attorney, loved ones would need to apply through court, which can be long and costly.

While every effort’s been made to ensure this article’s accuracy, it doesn’t constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can’t assume responsibility and don’t accept liability for any damage or loss which may arise as a result of your reliance upon it. This guide has been written with the kind help of the Alzheimer’s Society and Age UK.

What is Lasting Power of Attorney?

Thinking and talking about what would happen if our faculties deserted us is uncomfortable. Yet it’s important to consider how much worse the situation would be if you had a stroke, serious accident or dementia (for example, Alzheimer’s) without sorting it first.

If someone has difficulties that mean they can’t make decisions anymore, they will need help managing their finances. A Lasting Power of Attorney (LPA) is a legal document where someone – while they still have mental capacity – nominates a trusted friend or relative to look after their affairs if they later lost capacity. The key point to remember…

Don’t think you suddenly give up control. You can choose whether it can be used either before, or only when, you lose mental capacity.

Your representative (known as the ‘attorney’) should only ever make a choice for you if you’re unable to make that specific decision at the time it needs to be made. For example, if you fall into a coma, your attorney would start looking after your affairs. But if you wake from the coma, you should be able to make your own decisions again.

It’s worth noting LPAs replaced the previous Enduring Power of Attorney (EPA) system. EPAs set up before 1 October 2007 will still be valid, whether or not they have been registered, though they must be registered when the person loses capacity. For more, see the Government’s EPA info.

Why set up a Lasting Power of Attorney?

If you lose mental capacity, unless you’ve already filled in the Power of Attorney forms, your loved ones will need to apply through court to become ‘deputy’, a long and expensive process.

Instead, you can nominate a trusted friend or relative before you lose capacity, by setting up a Lasting Power of Attorney (LPA). You can appoint one or more representatives to act for you, and can determine how they work together to make decisions on your behalf.

You may be thinking “this doesn’t affect us, we’re perfectly well”. This is a common misunderstanding. The key thing to remember is…

You can only set up a Lasting Power of Attorney when you have mental capacity. Once you’ve lost capacity, it’s too late.

The key is to act early. This story from Forumite Norma Desmond explains why:

My mum is deputy (via the Court of Protection) to my dad, who has advanced dementia. It’s a very long, drawn out and quite intrusive process.

It’s also expensive. Mum will have to pay hefty yearly fees too. I just wish we’d managed to get Power of Attorney instead, when Dad was more capable. He got ill very fast and we couldn’t implement it.

• Jenny Keefe & Martin Lewis – MoneySavingExpert.com