Following the latest HMRC tax receipts and national insurance contributions figures, that shows Inheritance Tax (IHT) receipts reached £5.7 billion through the first two-thirds of this financial year (April to November, industry experts have shared their reaction.
Alastair Black, Head of Savings Policy, abrdn said; “Today’s figures confirm the consistent and significant uptick in IHT receipts since the start of the tax year. What’s more, annual receipts are now £0.6 billion higher than this time last year and we expect this to accelerate even further in the months, and years, to come.
“As we end the calendar year, many will turn their attention to preparing for April 2025, especially in light of the extended IHT threshold freeze and plans to bring pensions into the IHT sphere from April 2026. For those with specific concerns about inheritance tax, strategic financial planning will be critical in the months ahead.
“Advisers are telling us they have seen an increase in demand for advice which could make the advice gap even wider, so the FCA’s recent publication on Targeted Support is timely as an important step in the journey to address this.”
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “Inheritance Tax is set for another record year with receipts already over £550 million ahead of the total through the same period in 2023/24.
“With the thresholds frozen for a further two years by the Chancellor in the Budget and further exemptions removed, IHT is set to deliver an increasing tax-take for the Treasury. With the number of deaths subject to IHT now forecast to reach nearly 10% by the end of the decade, it underscores the importance of people staying on top of the value of their estate.
“As a starting point, we encourage people to make sure they have an up-to-date valuation of their estate to help them understand if they are likely to incur IHT. Estate planning is complex and professional financial advice can be immensely helpful for people who want to manage their estate efficiently and pass on the maximum inheritance to loved ones.”
Simon Martin, Head of UK Technical Services at Utmost Wealth Solutions commented: “The IHT snowball continues to gather growing momentum as the extended freeze in Inheritance Tax thresholds and rising property prices looks set to continue delivering record tax hauls to the Treasury.
“Changes to the IHT and non-dom regime announced at the Autumn Budget will spread the net further, leading to more and more estates being caught up in the tax as the Treasury clamps down on certain areas. While Inheritance Tax is often perceived as one of the more unpopular taxes, there are steps that can be taken to mitigate its impact, and this Budget will no doubt create the stimulus for people to urgently assess their circumstances.
“We expect to see a spike in demand for professional advice around inheritance tax as individuals reconsider their plans, which could see strategies shift to lifetime gifting earlier and more often to individuals or trusts and perhaps spending their pension pots. There could also be increased interest in insurance policies and death benefits that can protect individuals against these rising IHT liabilities.”
Shaun Moore, tax and financial planning expert at Quilter said: “Christmas has come early for the government, as this morning’s figures from HMRC reveal inheritance tax receipts for the period of April to November 2024 climbed to £5.7 billion, an increase of £0.6 billion compared to the same period last year.
“More and more people are being ensnared by inheritance tax, and this will only increase. With the IHT threshold frozen until 2030, coupled with pensions being added to the taxable estate from April 2027, the government’s coffers will get a substantial top-up in the coming years.
“Farmers will also start to add to these figures as Agricultural Property Relief becomes less generous. This could result in farming families facing bigger inheritance tax bills, which could force difficult decisions about the future of their farms. Additionally, the government’s changes to reliefs for AIM shares and Business Relief are also expected to boost its revenue.
“Capital Gains Tax (CGT) receipts have also increased, thanks to a combination of people selling off assets ahead of the widely anticipated CGT increases before the budget, as well as the impact of those tax hikes. October saw a marked increase in tax take, and this morning’s figures show November followed suit. CGT bills totalled £222 million in November, and there has now been a £230 million increase in tax take between April to November this year compared to the same period last year.
“PAYE income tax and National Insurance contributions (NICs) have also been rising exponentially, resulting in a total tax take of £277.6 billion so far this tax year, a £6.7 billion increase year on year. This is likely to continue rising as changes to employer NICs, including both an increase in the rate as well as a reduction in the earnings threshold at which employers begin to pay NICs, are expected to significantly boost the government’s revenues.
“Fiscal drag is a tried and tested policy on which the government has grown heavily reliant, and the latest budget will only exacerbate its impact. Looking ahead, the government’s tax take is expected to soar, all without increasing headline tax rates. However, it will need to tread carefully and monitor the long-term impacts of its policies on taxpayers, as well as ensuring they do not weigh too heavily on economic growth.
“Ultimately, with tax bills on the rise, careful financial planning tailored to people’s personal circumstances and financial goals will be vital.”
