Inheritance tax generates extra billions for HM Treasury
Latest IHT tax data shows receipts from April to September 2023 were £3.9 billion, which is £0.4 billion higher than the same time last year.
The Treasury collected almost £4 billion in inheritance tax (IHT) revenues in the first half of the tax year, a new record for the end of September and an increase of £400 million compared to the same time last year.
Latest IHT tax data from HM Treasury (main picture) shows receipts from April to September 2023 were £3.9 billion, which is £0.4 billion higher than in the same period a year earlier, much of of it from property sales.
COMBINED FREEZE
Had the nil rate band for IHT tracked inflation it would be close to half a million but it still stands at just £325,000. And couples would be able to pass on over £1.4 million tax free if both the nil rate band and residence nil rate band were linked to inflation. But the combined freeze on tax limits means families must past as much as £169,000 more IHT.
Julia Peake, tax and estate planning specialist at Canada Life, says: “There are rumours that the Chancellor is looking to make changes to inheritance tax.
“However, with potentially over £7 billion in taxes contributing to the Treasury, and the IFS recently proposing that by 2032, IHT will be worth £15 billion per year for the government, it will be interesting to see what changes Jeremy Hunt has in mind and how these might be applied.”
And she adds: “Don’t be lulled into a false sense of security that inheritance tax won’t apply to you. Though generally house prices may have fallen in recent months, this is not the case for the whole country.
“While your house will take up a large proportion of your available nil rate bands, IHT is calculated on the whole of your net estate, which includes savings, investments and other assets owned by you, which are not exempt or held in a trust, as well as gifts made in the last seven years.”
FIGURES IN CONTEXT
Laura Suter, head of personal finance at AJ Bell, adds: “To put those figures in context, more IHT has been paid in just six months than it was in the entire year a decade earlier.
“It also means that we’re on course to set a new record for the annual IHT bill, with the previous high set in 2022/23 at just over £7 billion.
“The rumour mill is full of talk of IHT being scrapped, potentially as soon as the Autumn Statement next month. But if the Government had instead increased the nil rate band in line with inflation, rather than putting the allowance on deep freeze, fewer people would be caught in the inheritance tax net.”
Jeremy Hunt will present the Autumn Statement 2023 to Parliament on 22 November.
