New data out today from HMRC shows that Inheritance Tax (IHT) receipts for April to July 2021 were £2.1 billion – £0.5 billion higher than the same period a year earlier.
Julia Rosenbloom, tax partner at Smith & Williamson, the professional services and accountancy firm, commented:
“The recent run of increases to monthly IHT receipts means the tax is becoming an increasingly important revenue source for the Treasury. One of the key drivers for the uplift will no doubt be the announcement in this year’s Spring Budget that both the nil rate and residence nil rate bands are to be frozen until at least April 2026, resulting in increased IHT bills for families as more estates are brought into scope on the back of soaring property and share prices.
“As the Government continues to spend to help re-build the country following the pandemic, as well as the need to fund other areas such as social care, it will no doubt be casting its net far and wide to boost its coffers. We still don’t know when the Chancellor will announce his next Budget, but whenever it takes place it is quite possible that personal taxes, including IHT and CGT, could be in for a massive overhaul given the amount they raise for the Treasury on an annual basis.
“Increases to IHT charges could affect many and some may need to go as far as selling family homes to pay their IHT bills. Starting tax planning as soon as possible will mean that people can make the most of their current allowances before any new reforms are introduced. I’d urge families to look carefully at the different options available, such as making gifts and investing tax-efficiently, which may help reduce or eliminate an IHT bill. Early planning will ensure you pass more assets on to your loved ones and causes you care about, rather than it going to HMRC.”