HMRC’s latest update on Inheritance Tax (“IHT”) receipts show that £5.7 billion was collected through Q1-Q3 of the 2023/24 Financial Year – an 8% increase on the same period in the previous year (£5.3 billion).
The tax looks likely to raise yet another record annual total for the Chancellor of the Exchequer.
With the Spring Budget a little over a month away, rumours continue to swirl around the potential for IHT to be scrapped altogether as the government looks to cut taxes ahead of a General Election.
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “We are now three-quarters of the way through the 2023-24 Financial Year and it is evident that the Chancellor can once again bank on record-busting IHT receipts for a third successive year.
“Freezing the thresholds has dragged more households into paying Inheritance Tax especially when combined with the property price rises of the last five years or so.
“At the current rate of collection, Inheritance Tax will raise around £7.6 billion for the Treasury in this Financial Year, far surpassing the OBR’s forecast of £7.2 billion as well as last year’s all-time high of £7.1 billion.
“It’s a useful source of revenue for the government but we may see the Chancellor prioritise political expediency in the coming Spring Budget as we rapidly approach the next General Election.
“Only a small proportion of households are impacted by IHT, but the tax bites deep on those estates affected. Our research* suggests there is a low level of understanding around the Inheritance Tax rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge.
“We would encourage people to assess the entire value of their estate, including an up-to-date valuation of their property, and familiarise themselves with the Inheritance Tax thresholds. 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 their potential tax liability.”
