HMRC’s second update for 2023/24 reveals £1.2 billion was collected by the Treasury through the first two months of the 2023/24 Financial Year.
It marks a 13% increase from the £1.1 billion raised by this point last year. The OBR’s latest forecasts suggest inheritance tax (IHT) will raise £7.2 billion this Financial Year and as much as £8.4 billion by 2027/28.
This comes as national newspaper The Daily Telegraph launched a campaign calling on the government to scrap IHT.
The newspaper said more than 50 Conservative MPs are also demanding that Prime Minister Rishi Sunak scraps the “morally wrong” tax on people’s estates after they die.
The front-page story pointed out that the number of estates being caught by the tax has soared since the Conservatives came into government amidst continually frozen nil-rate bands.
Stephen Lowe, group communications director at retirement specialist Just Group, commented:
“It’s clear that with the current thresholds frozen until 2028 and the increases in property prices through the pandemic, Inheritance Tax looks set to be the gift that keeps on giving for the Chancellor of the Exchequer – but at what political cost?
With households feeling the pinch and a General Election looming, political parties of all persuasions will be looking for ways to curry favour with the electorate and easing up on Inheritance Tax might be one option they consider.”
Andrew Tully, technical director, Canada Life, stated that, with the right planning, IHT can be a “largely discretionary tax”. He continued:
“But many people have found themselves being dragged into the IHT tax net through the growth in house prices, combined with the freezing of the tax bands”.
Using trusts and gifting, combined with the right retirement income strategy, can all help minimise the value of your estate when it comes to calculating any IHT liability, ensuring it can be passed on to your beneficiaries as efficiently as possible.”
Lowe added:
“Regardless of which way the political breeze blows, rising inheritance tax receipts should act as a warning for people to remember to assess the entire value of their estate, including an up-to-date valuation their property.
Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage that tax bill.”
Rachael Griffin, tax and financial planning expert at Quilter, stated that the HMRC tax and national insurance receipts illustrate “exactly why the Chancellor may resist reform for as long as possible”. She added:
“While IHT is not the government’s most lucrative tax, it has increased significantly in recent years as frozen thresholds and higher house prices led to more people being caught by in its net. Abolishing it altogether would punch a hole in the budget, compounding an already bleak economic outlook.
However with the next general election on the horizon in 2024, an increasingly under-fire Conservative government running out of time to drum up support may believe it has no choice but to reform one of the most hated taxes in Britain as a way to curry favour framed as helping more Brits pass on wealth to help the next generation. There are various mechanisms in which they could do this, but revising the threshold or cutting the 40% rate would be simplest.”
