Inheritance tax receipts for April 2024 to August 2024 totalled £3.5bn, which is £0.3bn higher than the same period last year. However, month on month receipts are down from the July figure.
Historically, June 2022 was the highest month for IHT receipts, exceeding £750m.
In terms of trends, higher receipts from March 2022 are thought to be due to a combination of higher volumes of wealth transfers following recent IHT-liable deaths, recent rises in asset values, and the government’s March 2021 and Autumn 2022 decisions to maintain the IHT tax free thresholds at their 2020 to 2021 levels up to and including 2027 to 2028.
Evelyn Partners tax specialist Laura Hayward commented: “Rising IHT receipts are a fact of life for the Treasury but even at the current rate of 9.4% on the year they aren’t rising fast enough to help fill the “black hole” that the Government says it has identified in the public finances. It’s by no means certain that the Chancellor will target the transfer of wealth to raise more tax revenue, but if she does then including defined contribution pension pots in the value of estates for IHT purposes seems to the front-runner in the line-up of possible changes.”
She added: ‘The latest IHT salvo in the great Budget debate has been fired by the Resolution Foundation, which this week urged the Chancellor to abolish the £175,000 residence nil-rate band on October 30, in order to save the Treasury an estimated £2bn. The think-tank said there was “a good case” for scrapping the RNRB, which means that homeowners who are leaving their main residence to a direct descendant can shield an extra £175,000 of their wealth, on top of the main £325,000 NRB available to everyone, from IHT.
Quilter tax planning expert Shaun Moore said: “This continued uptick in IHT receipts, which puts it on course for another record breaking year, will no doubt stoke the rumours and debates about whether the tax will be increased ahead of Labour’s first budget.
“As Labour navigates the complex issues surrounding IHT in the upcoming budget, there is a strong argument for simplifying the IHT system and making it more appealing to gift during one’s lifetime.”
He added: The complexity of the current system often leads to confusion and inequities. A simpler system could help reduce the administrative burden for both taxpayers and HMRC, while also making it fairer. Similarly, increasing the gifting threshold would encourage earlier wealth transfer, reducing future IHT liabilities, and could boost consumer spending.”
