Government raises £701m from inheritance tax receipts in May

‘Neither of the two main political parties have mentioned it’

A lucrative May means inheritance tax (IHT) receipts have hit £1.4bn in just the first two months of the 2024/25 financial year, HM Revenue and Customs figures show.

Latest data today (21 June) confirms the hotly debated tax raised £701m in May, meaning the tax take so far for the financial year is £200m higher than in the same period in 2023/24.

“The Office for Budget Responsibility’s forecast paints IHT as an increasingly lucrative source of income for the government with its latest revision expecting receipts to rise to an estimated £9.7bn by 2028/29, driven by a combination of frozen thresholds and house price growth tipping more estates over the threshold,” Just Group group communications director Stephen Lowe said.

With the general election less than two weeks away, Lowe noted there was “a distinct lack of policy commitments” in some of the key manifestos.

Wesleyan head of intermediary distribution Nick Henshaw agreed: “Yet another rise in IHT receipts only makes it more shocking that neither of the two main political parties have mentioned it.”

Wealth Club investment manager Nicholas Hyett said it was likely IHT would rise under both the Conservatives and Labour, however.

“Freezes on thresholds over the last few years, partnered with decades of house price rises have brought more and more estates into the tax band,” he explained. “Attempts to increase taxes on wealthy non-doms may be politically popular, but most of the tab will still be picked up by families who would not consider themselves particularly rich.”

Henshaw added: “The simple fact is that IHT is no longer just a tax for the super-wealthy, as it was designed. We urge whoever takes power to revisit it and ensure it is fit for purpose today, as well as streamlining it to make sure that it is as easy as possible for families to engage with.”

Abrdn head of savings policy Alastair Black said it is “critical” savers take time to consider how they want to pass on wealth effectively.

“Advisers have a real opportunity to once again show their value here,” he added. “This might include gifting or funding a pension.” 

Hope Coumbe Professional Adviser

Retirement ProfessionalsGovernment raises £701m from inheritance tax receipts in May