Inheritance tax receipts are on track to deliver £9.7bn to the Treasury by 2028/29 as they continue to rise, according to HMRC data.
In its monthly tax receipts and national insurance contributions bulletin, HMRC revealed IHT receipts for April 2023 to February 2024 were £6.8bn, a £0.4bn rise compared to the same period last year.
The OBR recently forecasted IHT receipts would increase by 37 per cent.
Richard Bate, head of private wealth at Weightmans, said: “Another rise in the amount of IHT being paid is ‘fiscal drag’ in action. More and more people are finding themselves liable for IHT as the value of their estates continues to grow but the threshold at which IHT must be paid remains frozen - we’re only likely to see this trend continue.
“The government has said the £325,000 IHT threshold, which has been unchanged since 2009, will remain until at least 2028.
"At the same time, the prices of homes, which can be one of the single biggest factors determining the size of someone’s estate, are on the rise, with more than £5,000 added to the value of the average family house in the last month alone.”
The previous financial year saw IHT receipts have a record breaking year, collecting £7.1bn for the Treasury however 2023/24 looks to exceed that total.
Stephen Lowe, group communications director at retirement specialist Just Group, added: “With one-month of the 2023/24 financial year to go, IHT looks certain to record another all-time receipts high.
"The February receipts announced today were £564mn leaving only £263mn to be raised in March, in order for this year’s IHT tax take to exceed last year’s already record amount.
“Despite speculation that the chancellor would tinker with IHT in the Spring Budget it was left alone – and with public finances so tight, it is little wonder.
“Frozen thresholds and the increase in property values have dragged more estates into paying the tax and 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 IHT rules.”
Laura Hayward, tax partner at Evelyn Partners said the impact of IHT is set to grow as there is a “massive transfer” of wealth coming in the next couple of decades.
“Research shows that the older generations have as much as £2.6tn of equity tied up in their homes, which the next generation, or the one after, are set to inherit.
“With nil-rate band allowances currently frozen and shrinking in real terms with inflation, that could lead to an explosion in IHT liabilities, if rules remain the same,” she added.
Other taxes
Additionally, income tax, capital gains tax and national insurance contributions receipts for April 2023 to February 2024 rose to £430.3bn, a £23.3bn rise compared to the same period last year.
These figures include the first two months of the government’s 2 per cent to NI from 12 per cent to 10 per cent which Rachel Griffin, tax and financial planning expert at Quilter said has “done little to slow the rate at which government’s increase in tax take grows".
