Inheritance Tax receipts published by HMRC reveal April 2025 income stood at £97m higher than April 2024 at £800m continuing the recent upward trend driven by the ‘prolonged freeze’ on IHT thresholds and rising property prices.
Many continue to be ‘caught out’ says Tim Snaith, Partner at Winckworth Sherwood, due to the nil-rate band (NRB) and the residence nil-rate band (RNRB) remaining unchanged, despite increases in inflation and property values ‘which means more estates are becoming liable for the tax as asset values increase. It remains a persistent and unavoidable inheritance tax planning issue, and one that should not be ignored’ he adds.
The 13.8% increase on last year ‘opens where the previous one left off, with a predictable and substantial annual rise in Inheritance Tax receipts’ says Ian Dyall, Head of Estate Planning at wealth management firm Evelyn Partners.
“Estimates last month revealed that IHT receipts for the 2024/25 financial year were 10.8% up on the previous one, and there’s nothing to suggest the current one will be any different.”
He adds the government appear to see the passing on of estate as a ‘legitimate target for tightening up the tax net’ adding he would be surprised if there weren’t changes to IHT reliefs in the next couple of years; although perhaps not before the next budget. Clearly the current fiscal climate is on the government’s mind, especially in the wake of announcements in the last week on Winter Fuel Allowance.
“What has stirred up some interest in the Government’s intentions for IHT – aside from those announced at the October Budget – is the memo from the Deputy PM to the Chancellor leaked this week. That called for – among other tax rises – IHT relief on AIM shares to be removed altogether, which would go further than the current cut to 50% due for April 2026, and would save the Treasury £1billion. Whether this suggestion carries any weight with the Chancellor is unknown, but with the PM also rowing back on cuts to the Winter Fuel Allowance this week, questions are bound to arise around tax if the fiscal outlook doesn’t improve before the Autumn Budget.”
It’s a sentiment shared by Shaun Moore, tax and financial planning expert at Quilter, who says the leaked proposals demonstrate ‘the Treasury’s appetite for revenue may not yet be satisfied.’
“The memo reportedly included a raft of potential revenue-raising measures such as reinstating the pensions lifetime allowance, scaling back dividend tax reliefs, and a higher corporation tax rate for banks. Combined with speculation that the additional rate income tax threshold could remain frozen beyond 2028, it is clear the UK’s tax landscape is evolving quickly and may become more punitive.”
