Inheritance Tax receipts for April 2024 to October 2024 are £5.0 billion, which is £0.5 billion higher than the same period last year, according to HM Revenue and Customs (HMRC).
October’s receipts of £776m are two thirds higher than the same month in 2021 and annual receipts are set to smash through the £8bn level this tax year to about £8.5bn. This follows previous record setting years in the 2021/22, 2022/23 and 2023/24 years of £6.1bn, £7.1bn and £7.5bn respectively. Katharine Arthur, Partner, HaysMac, commented:
“The build up to the Autumn Budget in late October undoubtedly saw a lot of people considering their tax planning – with several people opting to sell certain assets from their portfolio to mitigate the hotly anticipated changes.
The fact that Capital Gains Tax – CGT – receipts were 44% higher in October 2024 than in October 2023 could be somewhat of an indication of this: it may well have been driven by the disposal of residential properties such as buy-to-lets ahead of the Budget, as property CGT is payable within 60 days. Anecdotally, a number of my clients opted to sell significant shares in the run-up to the Budget, but in practice we won’t find out the full extent this until tax returns in January 2026 – so watch this space.
Inheritance tax remains a hot topic for all, but even before the latest Budget announcements the receipts were hitting an annual high – at £776million for October alone. The big freeze on the nil rate band has meant more and more families are drawn into paying inheritance tax as inflation drives up property and asset values. The Budget’s announcement to lift the nil rate band in 2030 might seem like a silver lining, but it is still a long way off – and we’ll continue to see receipts and the number of people affected rise up to this point.”
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. Rachael Griffin, tax and financial planning expert at Quilter, said:
“The latest HMRC figures, released this morning, reveal that inheritance tax (IHT) receipts for the period April to October 2024 have reached £5.0 billion an increase of £0.5 billion compared to the same period last year. This consistent upward trend underscores the government’s rationale for freezing the IHT threshold until 2030. However, incorporating pensions into the taxable estate from April 2027 will turbo charge this data.
Farmers are also likely to start to bolster these figures as Agricultural Property Relief (APR) is made less generous. These changes mean more farmers may face higher IHT liabilities, potentially forcing difficult decisions about the future of family-owned farms. Similarly, the tightening of reliefs for AIM shares and Business Relief (BR) will also raise more for government coffers. These various changes are likely to drive greater urgency in estate planning, as taxpayers seek to navigate a landscape where traditional reliefs and exemptions are gradually eroded and new financial plans need to be laid.
Capital Gains Tax (CGT) receipts saw an uptick in the months leading up to the budget reflecting the impact of pre-budget rumour mill and expected policy changes. In fact, receipts were around £180 million more in the period from April to October 2024 compared the same period a year earlier. Some investors and property owners will have moved to offload assets ahead of the widely anticipated CGT increases announced in the recent budget.
In addition, PAYE income tax and National Insurance contributions (NICs) for the same period have risen to £244.4 billion reflecting a £5.8 billion increase year-on-year. While the personal tax take from NICs is not expected to rise significantly, the government has made significant changes to employer NICs. The recent budget introduced an increase in the employer NICs rate for employees and a reduction in the earnings threshold at which employers begin to pay NICs. These measures, designed to target businesses rather than individuals, are set to deliver a significant boost to government revenues. Although businesses may be forced to slow wage growth in the face of increased costs.
These figures underscore the government’s reliance on fiscal drag and incremental policy changes to boost revenues without formally increasing headline tax rates. While Labour has maintained its pledge not to raise taxes on working individuals, the combination of wage inflation and frozen thresholds means that taxpayers are increasingly being caught in higher tax brackets.
As the government navigates these complex fiscal dynamics, it will be crucial to monitor the long-term impact on taxpayers and the economy. Policies aimed at raising revenue must strike a delicate balance to avoid disproportionately burdening certain groups or stifling economic growth. With tax receipts continuing to climb, the need for clear, transparent communication and strategic financial planning becomes ever more critical.”
