Inheritance TaxApr 25 2023

IHT receipts grow by £1bn year-on-year

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IHT receipts grow by £1bn year-on-year
The OBR has predicted that between the tax years 2022 and 2028 the Treasury will collect £45bn in IHT receipts, but some have speculated that the tax may be cut in the run up to the next general election.

The government has seen its inheritance tax intake increase by £1bn in the last year, as tax experts note that higher house prices mean it is no longer just a tax on the wealthy alone.

Figures from HM Revenue and Customs, published this morning (April 25), showed IHT receipts were up by £1bn in the months between April 2022 and March 2023 compared to the same period last year.

Total inheritance tax receipts for this period were £7.1bn, with the rise following a trend of record-breaking intakes for HMRC.

IHT receipts by month

Source: HM Revenue and Customs

In his Autumn Statement last November, chancellor Jeremy Hunt froze the IHT threshold of £325,000 for a further two years, to 2027/28.

Forecasts by the Office of Budget Responsibility published alongside the Spring Budget in March, predicted that between the tax years 2022 and 2028 the Treasury will collect £45bn in IHT receipts.

This is up from the £42.1bn estimated only last November. 

However there is also speculation by some that the tax may be cut by the Conservative party as a manifesto pledge in the run up to the next general election.

Laura Hayward, tax partner at Evelyn Partners, said that regardless of speculation, today’s figures highlight the need for families to be prudent with their tax planning to ensure they do not pay more than they need to. 

“More families are expected to be caught by the IHT net given the inflationary growth of asset values coupled with the fact that the nil rate band remains frozen at £325,000 until at least April 2028,” she said. 

“The latest year-on-year rise in IHT receipts provides a reminder of how this lucrative form of revenue has become well-established as a gift that keeps on giving for the Treasury,” she added.

Others noted that property prices that remain inflated have also been responsible for driving the rise in government receipts.

Stephen Lowe, group communications director at retirement specialist Just Group, said: “Inheritance tax receipts stormed to record highs this financial year as the chancellor continues to benefit from frozen thresholds and soaring property prices through the pandemic.”

“There seems to be no limit to the Treasury’s appetite for inheritance tax and given receipts for this financial year have already surpassed upgraded estimates, it looks set to be the goose that lays golden eggs for some time yet.

“It’s important that people regularly assess the value of their estates, including an up-to-date valuation of any owned property,” he added.