Inheritance Tax receipts for April 2023 to November 2023 are £5.2 billion, which is £0.4 billion higher than the same period last year.
Lower receipts in April and May 2020 were due to a temporary issue where HMRC were unable to accept cheques for payment of IHT due to COVID-19, which was resolved, hence the peak in June 2020 receipts.
What’s more, higher receipts from March 2022 are expected to be due to a combination of higher volumes of wealth transfers following recent IHT-liable deaths, recent rises in asset values, and the government’s March 2021 and Autumn 2022 decisions to maintain the IHT tax free thresholds at their 2020 to 2021 levels up to and including 2027 to 2028, and more information on these decisions are available in the policy papers accompanying the Budget 2021 Finance Bill and the Autumn Finance Bill 2022.
The higher receipts in June 2022, November 2022, June 2023 and October 2023 can be attributed to a small number of higher-value payments than usual. Commenting on the data, Shaun Moore, tax and financial planning expert at Quilter, said:
“Inheritance tax receipts are expected to continue rising and we will likely see them beat the previous £7.1bn record before the end of the tax year. It had been widely rumoured that the government was looking to make changes to its IHT rules, but at least for now more families will be topping up government coffers as they are caught by the IHT net.
IHT is a highly emotive tax that can split voters, so we can expect it to continue being a battleground policy for both the Conservatives and Labour as we near the general election. Though Jeremy Hunt opted not to make changes during his latest statement, we are expecting a budget to take place in March during which it could resurface if the Tories view it as a vote winner. Either way, some form of simplification of the tax is overdue.
Financial planners can help people manage their tax affairs to optimise their money. The rules and restrictions surrounding aspects of IHT such as the residence nil rate band can be difficult to navigate, and with an increasing number of people facing unexpected IHT bills, seeking professional financial advice can be highly beneficial in terms of ensuring you plan effectively to mitigate unnecessary costs.”