Inheritance tax receipts are set to have a ‘record breaking’ year as they continue to rise, according to HMRC data.
In its monthly tax receipts and national insurance contributions bulletin, HMRC revealed IHT receipts for April 2023 to January 2024 hit £6.3bn, a £0.4bn rise compared to the same period last year.
Andrew Tully, technical service director at Nucleus said: “It looks set to be another record-breaking year for IHT receipts.
"And with the Office of Budget Responsibility predicting the IHT take will be £8.4bn in 2027/28 receipts are set to continue growing strongly, despite slower house price growth, and may well exceed those OBR predictions, given this year’s receipts are on track for around £8bn.”
The nil-rate band has been frozen at £325,000 since 2009, and coupled with rising house prices and growth in investment assets, this has caused more estates to be dragged over the threshold, according to Laura Hayward, tax partner at Evelyn Partners.
She added: “Minor property downturns such as we’ve seen in the last year or so will do little to dent this trend. And even though the Covid effect on mortality, which was at one point increasing the overall IHT take, must now have all-but played out, IHT receipts continue to rise.”
Rise in IHT receipts contributed to overall HMRC tax receipts for April 2023 to January 2024 hitting £695.1bn, £33.6bn higher than the same period last year.
Stacey Love, tax and estate planning specialist at Canada Life said “all eyes and ears” would be on the Spring Budget taking place next month to see if chancellor Jeremy Hunt will propose any changes to IHT.
There have been rumours that Hunt plans to abolish the tax however Alastair Black, head of savings policy at Abrdn said this would be “unlikely”.
“If it did happen it would rock the financial advice sector. The sudden pressure to unwind existing planning would strain advisers’ capacity at a time when they’re already very busy helping clients navigate the LTA abolition.
“Instead, the chancellor may make changes to the system. And if he really wants to make a difference here, he should be focused on simplification,” he added.
Additionally, income tax, capital gains tax and national insurance contributions receipts for April 2023 to January 2024 rose to £390.9bn, a £21.1bn increase compared to the same period last year.
alina.khan@ft.com
