New data released by HM Revenue & Customs (HMRC) has revealed inheritance tax (IHT) receipts are up 18% compared with the same period last year.
Total receipts for the financial year up to January sit at £5.9 billion – £900 million higher than the £5 billion seen last year.
This rise is largely driven by the incessant house price growth over the course of 2020, 2021, and 2022. It also comes against a backdrop of reports of HMRC “targeting bereaved families” with IHT raids on estates of particularly high value.
Rachael Griffin, tax and financial planning expert at Quilter, said IHT is proving “increasingly lucrative” amidst continued freezes on tax allowances and thresholds:
“Inheritance tax has historically been considered a tax for only the very wealthy, but the current freeze coupled with inflated house prices has seen far more people caught by the net. Even those who may not consider themselves wealthy could now end up paying inheritance tax as their property value has grown so much.”
Also commenting on the figures was John Glencross, CEO and Co-Founder of Calculus:
“IHT receipts will continue to remain high given the freezing of IHT thresholds for two more years. One area that advisers and investors could consider helping mitigate against IHT is by investing in an Enterprise Investment Scheme (EIS), as full inheritance tax relief is provided, for the life of the investment once the shares have been held for two years.”