Figures released by HM Revenue & Customs have revealed that inheritance tax (IHT) receipts between April and July this year were £2.4 billion, with £600 million collected in July alone.
The figure of £2.4 billion is £300 million higher than in the same period last year.
This comes as overall receipts for the year leading up to July 2022 were 14% higher than the previous year.
This is largely driven by rampant inflation and soaring house prices, both of which are causing the value of estates to go through the roof.
Couple this with the fact that the nil rate band has been frozen since 2009 and is not set to be reviewed until April 2026, it is no surprise that the Office for Budget Responsibility has predicted that annual receipts – which were £6.1 billion in 2021/22, up from £2.38 billion in 2009/10 – will rise to a striking £8.3 billion by 2026.
“This is a tax that is no longer just affecting the very wealthy in society and is increasingly catching out families who are unprepared or simply unaware,” said Andrew Tully, technical director at Canada Life. He continued:
“The frozen thresholds mean that HMRC has already doubled its tax take from IHT over the last 10 years. This surge will partly be driven by the ongoing increase in house prices, as residential property makes up the largest share of most estates. There has also been a higher volume of wealth transfers due to Covid – partly due to more deaths in the elderly population, but also as a result of higher asset values.
Both the nil rate band and residence nil rate band are frozen until at least April 2026, so we can expect to see IHT receipts continue to rise.”
