HM Revenue & Customs (HMRC) received a further £0.6 billion in inheritance tax (IHT) receipts during October, new data has revealed.
The total take for the tax year to date now sits at a striking £4.1 billion, some £0.5 billion higher than the same period a year earlier.
Following months of successive property price rises, it’s unsurprising that the value of people’s estates – and therefore their IHT bill – has climbed accordingly.
What’s more, with Chancellor of the Exchequer Jeremy Hunt recently announcing a freeze on the nil-rate bands (NRBs) until 2028, it’s likely the current rates will outlast any impending dip in property prices, therefore seeing IHT receipts continuing to climb into the foreseeable future.
This is somewhat confirmed by Office for Budget Responsibility projections, who said the recent freeze will lead to an increase in receipts from £6.1 billion 2021/22 to £7.8 billion in 2027/28 – an increase of 28%.
Emily Deane TEP, STEP’s Technical Counsel and Head of Government Affairs, said the IHT system is “too complex, unfair, and in dire need of reform”, suggesting a lower rate tax with less exemptions is “far preferable” to one with a higher headline rate that only those who can afford access to professional advice can avoid.
However, the government is essentially preserving the status quo – something Deane said is “incredibly disappointing”.
“Tinkering with rates and reliefs will do nothing to address the huge complexity many families face.
Any changes must look at the tax as a whole, not just individual reliefs and rates, which if scrapped and amended in isolation can lead to increased avoidance and abuse.
Not reforming inheritance tax would be a missed opportunity to make positive changes to address this complex, ineffective and unfair tax.”