Inheritance Tax receipts for April 2024 to November 2024 are £5.7 billion, which is £0.6 billion higher than the same period last year, according to HM Revenue & Customs (HMRC).
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. Richard Bate, head of private wealth at national law firm Weightmans, said:
“The continued rise in inheritance tax receipts reflects how frozen thresholds and increasing property and asset values are pulling more families into the IHT net. Many estates that wouldn’t traditionally face this tax are now being caught out, leaving families with unexpected and often significant tax bills.
“With the nil-rate band frozen at £325,000 and the residence nil-rate band at £175,000 until 2030, the scope for tax-free inheritance has been shrinking each year. When you factor in the inclusion of pension funds from 2027 and the upcoming cap on agricultural and business property relief at £1 million from 2026, the message is clear – the sooner families start planning, the better.Options like lifetime gifting – whether regular gifts out of income or smaller amount within annual allowances or larger ones subject to the seven-year rule – can reduce the taxable value of estates. For those holding significant assets like property or shares, it’s worth exploring more structured solutions, such as setting up trusts or family investment companies, which can allow a gift to be made early with the ultimate recipient being decided later and so provide flexibility and asset protection benefits.
IHT is no longer to be seen as a tax on the wealthy – it affects a much broader range of estates and family savings. Strategic planning can help avoid difficult decisions, like having to sell property or other key assets at what might be just the wrong time, to meet tax liabilities.”
