The government has raked in another £4.1bn in inheritance tax receipts in the months between April and October 2022.
Figures from HM Revenue and Customs, published this morning (November 22), showed IHT receipts were up £500mn, or 14 per cent, compared to the same period a year earlier, continuing an upward trend.
Andrew Tully, technical director at Canada Life, said: “With the latest fiscal manoeuvring, independent forecasts expect IHT receipts to reach £7.8bn annually from 2027-28, an increase of almost a third from where we are today.
Source: Canada Life
These figures come just days after the Autumn Statement when it was announced the inheritance tax threshold of £325,000 will be frozen until April 2028.
The nil rate band has been at £325,000 since 2009 which means should the freeze remain in place as planned it will have been in place for almost two decades.
The Office of Budget Responsibility expects the freeze in the nil rate band to push up IHT receipts from £6.1bn in 2021-22 to £7.8bn in tax year 2027-28 - an increase of 28 per cent or £1.7bn.
According to the latest HMRC data, the number of deaths resulting in an IHT charge in 2019-20 was 23,000, or just shy of 4 per cent - this compares to around 15,000 or less than 3 per cent in 2009-10.
Julia Rosenbloom, tax partner at Evelyn Partners, said today’s figures show how effective the allowance freeze has been.
Rosenbloom said: “IHT has been described as a ‘voluntary’ tax in some senses, as giving away assets during lifetime is a very effective way of reducing or wiping out IHT liability. But large gifts remain part of the estate for seven years, assets must be handed over ‘without strings’, and most savers prefer to retain access to their assets in case they are needed as they grow older.
“Smaller gifts can be made that leave the estate immediately but the limits are restrictive and are subject to the same shrinkage in real terms in the face of inflation as the nil-rate band.”