BR report 2018

15 14 Unfortunately there is a two-year lag in HMRC’s data, so we are unable to make observations on the latest trend in the amount of BR claimed. The delay is due to both the six month lag from date of death to when the IHT becomes due and subsequent time lags while the data from tax returns is prepared for analysis on HMRC’s databases. The next update will be released in July 2018, and will include statistics for the 2015/16 tax year. BREAKING DOWN IHT BY ESTATE BAND The average tax liabilities within each value band have increased between 2013/14 and 2014/15. Most notably, the average tax liability of estates valued over £2m has increased by 20% and this may be due to increases in the value of assets in the larger estates. There was a large fall in the number of IHT liable estates left on death in the under £500,000 size band between 2007-08 and 2008-09. This is largely due to the introduction of the transferable nil rate band (as well as to inflation-linked threshold increases). The numbers of IHT liable estates has been rising since 2009-10 in each of the bands over £500,000. The amount of relief available for BR investments in unquoted shares increased by 19% to £1.7bn in 2014/15. There had been a spike in interest in the “other business reliefs” category in 2013/14, which was perhaps due to the inclusion of AIM shares as ISA eligible assets. However, the most recent data suggests that investors prefer to avoid the more volatile nature of the AIM market by investing in entirely unquoted shares. BR IHT EXEMPTIONS AND RELIEFS NO. OF ESTATES FOR WHICH TAX IS DUE, BY ESTATE BAND (2007/08-2014/15) less than £500,000 £5,000-£1m £1m-£2m more than £2m 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 IHT BY REGION Unsurprisingly, London and the South East account for the lion’s share of IHT liabilities. However, there is a notable growth in the value of IHT liability in the East of England, the South East and Scotland. This highlights the opportunity for advisers to focus on clients outside the capital, and to review whether investing in BR qualifying assets is a suitable solution for them. TOTAL IHT LIABILITIES BY REGION VS. NO. OF ESTATES WITH AN IHT LIABILITY (2014-15) TOTAL IHT LIABILITIES NO. OF ESTATES WITH AN IHT LIABILITY 2010 2011 2012 2013 2014 NO. OF CASES AMOUNT (£M) NO. OF CASES AMOUNT (£M) NO. OF CASES AMOUNT (£M) NO. OF CASES AMOUNT (£M) NO. OF CASES AMOUNT (£M) BR 2,192 590 2,607 1,606 2,756 1,653 2,639 1,994 2,608 2,290 OF WHICH RELIEF ON UNQUOTED SHARES 1,029 419 1,213 1,115 1,390 1,246 1,367 1,443 1,429 1,720 OF WHICH OTHER BUSINESS RELIEFS 1,297 95 1,574 491 1,522 408 1,433 551 1,333 570 In 2007-08 the median IHT liable estate was in the under £500,000 band, but in all subsequent years the median IHT liable estate has been in the £500,000 to £1,000,000 band. Again, the introduction of the transferable nil rate band looks the likely culprit here, but this band also shows the steepest increase in the number of liable estates, suggesting the highest proportionate increase in wealth generated has been in this band. SOURCE: HMRC 2007-08 2008-09 2009-10 SOURCE: HMRC 2012-13 2013-14 2014-15 2010-11 2011-12 “Business relief has become a prime alternative to more conventional estate planning strategies because of its flexibility and simplicity.” — SIMON HARRYMAN, INVESTMENT DIRECTOR, INGENIOUS “More and more accountants and solicitors are discussing Business Relief with their clients as an effective IHT planning tool, which is simple, timely and straightforward.” — BELINDA THOMAS, HEAD OF SALES AND INVESTOR RELATIONS, TRIPLE POINT “Using BR for IHT relief can enable the client and their beneficiaries to mitigate the tax, and to potentially see enhanced investment value from a BR-qualifying asset, while retaining access and control throughout.” — JERRY PRICE, CHIEF DISTRIBUTION OFFICER, BLACKFINCH 400 800 1200 2,000 4,000 6.000 NORTH EAST 400 800 1200 2,000 4,000 6.000 NORTH WEST 400 800 1200 2,000 4,000 6.000 YORKSHIRE & THE HUMBER 400 800 1200 2,000 4,000 6.000 EAST MIDLANDS 400 800 1200 2,000 4,000 6.000 WEST MIDLANDS 400 800 1200 2,000 4,000 6.000 EAST ENGLAND 400 800 1200 2,000 4,000 6.000 LONDON 400 800 1200 2,000 4,000 6.000 SOUTH EAST 400 800 1200 2,000 4,000 6.000 SOUTH WEST 400 800 1200 2,000 4,000 6.000 SCOTLAND 400 800 1200 2,000 4,000 6.000 NORTHERN IRELAND 400 800 1200 2,000 4,000 6.000 WALES