According to HM Revenue & Customs data published today (September 21), IHT receipts were up £700m in the period, reaching £2.7bn, as both the nil rate band and residence nil rate remained frozen at existing levels.
Shaun Moore, tax and financial planning expert at Quilter, said: “While this is a decent uplift for the chancellor, it is really a small beer when compared to other forms of tax.
“This is why the chancellor may well be looking elsewhere to raise some serious cash in his Budget come the autumn.”
Moore continued: “The chancellor needs additional funds to pay for the pandemic’s economic support schemes.”
Julia Rosenbloom, tax partner at Smith & Williamson, agreed tax changes were on the horizon.
“IHT receipts are proving to be an increasingly lucrative source of revenue for the Treasury and provide funds to the government to help re-build the country following the pandemic and pay for its planned programme of reforms," she said.
"The prime minister’s recent announcement introducing a new health and social care levy demonstrates that he is not afraid of tax rises, even if they are unpopular with some members of his own party.
"This raises speculation that when the chancellor unveils his Budget next month, personal taxes such IHT and CGT could be in for reform given the amount they raise for the Treasury."
Others said IHT receipts would keep rising steadily into 2022 even if left untouched.
“The main reasons for the rise in IHT receipts are threefold," Paul Archer, wealth planner at Kingswood, explained.
“First, the nil rate band of £325,000 - the asset amount an individual has free before they are charged IHT at 40 per cent - has not risen since 2009.
“Second, estate values have risen in the last year mainly due to strong investment returns and property value rises.”
“And third, the majority of wealth in the UK is owned by the over 60s, which is the age bracket where sadly Covid has resulted in more deaths than usual.
“Indeed for these reasons, we expect to see IHT receipts rising steadily this year and into 2022.”
In March, Sunak announced that both the nil rate band and residence nil rate for IHT would remain frozen at existing levels until April 2026, at £325,000 and £175,000 respectively.
But whilst house price growth over the last year has driven up the value of people’s residential assets, more recent data and expert analysis suggests a “gradual deflation” in the near future.
