New data published today by HMRC shows that IHT receipts for April to October 2023 were £4.6 billion, which is £0.5 billion higher than the same period a year earlier.
Laura Hayward, tax partner at Evelyn Partners, the leading integrated wealth management and professional services group, comments:
“The Treasury will welcome the news that IHT receipts have shown yet another year-on-year increase. All eyes are now on whether IHT will get a mention in the Chancellor’s Autumn Statement tomorrow. While abolishing IHT completely would be a popular move with many, it seems more likely that the government will reserve this as an idea for a Conservative election manifesto pledge.
“If the latest reports are to be believed, cuts to IHT are likely to take a backseat to other possible tax changes in tomorrow’s Autumn Statement. However, with Jeremy Hunt noting that ‘everything is on the table in an Autumn Statement’ it’s not impossible that we could still see changes of sorts to the IHT charging regime announced tomorrow.
“There has been some speculation that there could be a cut to the rate charged, which is currently levied at 40% on estates above the value of £325,000. Some have also suggested that the main nil-rate band (£325,000) could be combined with the residential nil-rate band allowance (currently £175,000) to give a total IHT-free allowance of £500,000.
“Many will be hoping for changes here given that more and more families are being dragged into paying IHT by stealth as a result of the frozen allowances*, inflationary growth of asset values and other factors. This can be a complex area so taking professional advice can be one of the ways that can help families understand how to manage their money tax efficiently and help ensure they don’t pay more tax than they need to.
“Making gifts to family members or investing tax-efficiently can help reduce or eliminate IHT bills. Gifts you make to other individuals are generally not subject to IHT unless you die within seven years. There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to IHT even if you do die within seven years.
“We know the many families want to ensure that gifts are used in a responsible way which can make setting up trusts an effective tool for tax efficiently passing on assets to the next generation in a controlled way.”
**the nil rate band remains frozen at £325,000 until at least April 2028