Following the latest HMRC tax and national insurance receipts, Rachael Griffin, tax and financial planning expert at Quilter has commented.
She said:“Amidst calls for the government to overhaul its dated inheritance tax rules, this morning’s HMRC tax and national insurance receipts illustrate exactly why the Chancellor may resist reform for as long as possible.
“Today’s data reports IHT receipts filling government coffers to the tune of £1.2 billion in April to May 2023, which is £0.1 billion higher than the same period a year earlier. The 2022/23 IHT take reached a record-breaking £7.1 billion, and if the tax take continues to grow at its current pace, we can expect these figures to reach new highs again.
“While IHT is not the government’s most lucrative tax, it has increased significantly in recent years as frozen thresholds and higher house prices led to more people being caught by in its net. Abolishing it altogether would punch a hole in the budget, compounding an already bleak economic outlook. However with the next general election on the horizon in 2024, an increasingly under-fire Conservative government running out of time to drum up support may believe it has no choice but to reform one of the most hated taxes in Britain as a way to curry favour framed as helping more Brits pass on wealth to help the next generation. There are various mechanisms in which they could do this, but revising the threshold or cutting the 40% rate would be simplest.
“Elsewhere, the latest figures show receipts from PAYE income tax and national insurance payments for April to May 2023 were £73.3 billion – a notable £4.9 billion increase compared to the same period a year earlier. The threshold for the additional rate of income tax has now dropped from £150,000 to £125,140, and income tax levels are frozen until 2028, so thanks to fiscal drag this uptick in tax take will continue and will boost government coffers significantly.
“An increasing number of people are facing unexpected IHT bills, so seeking professional financial advice is key when it comes to managing your money in the most tax efficient way possible. IHT can be very complex, particularly when it comes to the rules and restrictions surrounding aspects such as the residence nil rate band, so a financial planner can help you plan effectively to help you mitigate unnecessary costs.”
