‘More good news for the Treasury’ as April nets £0.6bn
Inheritance tax (IHT) receipts for April 2023 again crept higher reaching £0.6bn, which is £0.1bn up on the same period last year, latest figures reveal.
IHT receipts were £5.3bn in 2020/21 and £6.1bn in 2021/22 demonstrating how “increasingly lucrative” the tax is for the government, according to Just Group.
It also pointed out that the Office for Budget Responsibility’s latest forecasts suggested IHT would raise £7.2bn this financial year and as much as £8.4bn by 2027/28 as more estates get caught by the frozen thresholds.
Just Group communications director Stephen Lowe said: “The past two years have seen increases of 14% and then 17% in IHT receipts which are growing by nearly £1bn every 12 months. This year has already got off to a hot start with receipts in April up £90m compared to the same month last year.
“The increased tax hauls are likely being driven by a combination of frozen thresholds and rising property prices around the time of the pandemic. With the existing thresholds due to remain in place until 2027/28, the Treasury looks set to continue banking healthy inheritance tax receipts.
“The figures should act as a warning for people to remember to assess the value of their estates, 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.”
‘Golden goose’
Canada Life technical director Andrew Tully said: “The government’s proverbial golden goose looks set to continue to deliver, as today’s data shows. Inheritance tax receipts have eclipsed the same period as last year by 20%, indicating that we are in for another record-breaking year.
“The reality is that if house prices continue to rise, and with the nil rate band of £325,000 frozen until 2028, more families will be facing a hefty bill from the tax man.
“There are perfectly legitimate ways of reducing your estate’s IHT bill, for example through the use of gifting, setting up trusts, or setting up a will with a charitable beneficiary. Inheritance tax should no longer be viewed as a tax on the wealthy, and proper financial planning well in advance can help avoid being blindsided at the 11th hour.
“Seeking professional financial advice will ensure you’re best equipped to navigate the tax system.”
Evelyn Partners tax partner Laura Hayward added: “The latest year-on-year increase in IHT receipts provides more good news for the Treasury. Given the inflationary growth of asset values coupled with frozen allowances, the rise and rise of IHT receipts seems to be unstoppable.
“Today’s update from HMRC should be a wake-up call for families to give careful thought to their tax planning to ensure they don’t pay more tax than they need to. Families can minimise the chances of being hit by a hefty IHT bill by taking action now.”
Jenna Brown (Professional Adviser)