Inheritance tax receipts grew to an “unprecedented” £7.5bn between April 2023 and March 2024, data from HM Revenue and Customs has revealed.
The latest HMRC tax receipts monthly bulletin found that IHT receipts rose by £400mn between April and March, when compared with the same period in the previous year.
Part of this rise, specifically the increase that took place in June and October 2023, was attributed to a small number of higher-value payments than usual.
Canada Life technical manager for tax trusts and estate planning, Stacey Love, said: “IHT is the tax gift that keeps on giving as record receipts have been banked by HMRC in the last tax year.
“While the trend is only on the way up, IHT continues to be a largely discretionary tax.
“Many estates may not have to pay IHT at all if the various exemptions and gifts are used appropriately, and this is an area of financial planning where it really does make sense to seek appropriate financial advice.”
However, Quilter tax and financial planning expert, Rachael Griffin stated the findings “has reignited discussions” about the fairness and structure of the IHT system.
“Despite considerable speculation that the government would look to enact IHT reform, so far all has remained quiet on this front and this morning’s figures illustrate exactly why the chancellor would have been keen to leave it well alone,” she explained.
“Nonetheless, the ever-increasing tax revenue from IHT presents a conundrum for the government as we approach the general election, and it is certainly an area to watch for as the various party manifestos begin to appear.
“The lowering of the headline rate of IHT from 40. per cent would undoubtedly be met with approval from core Tory voters.
“However, more widely, it would likely prove unpopular given it would benefit the rich at a time when so many across the nation continue to struggle with the cost of living.”
Other findings
HMRC also reported that its total tax receipts between April 2023 and March 2024 reached £827.7bn, an increase of £39.1bn higher than the same period last year.
This was in part driven by income tax, capital gains tax, and national insurance contributions standing at £466.5bn.
This represented an increase of £23.7bn on the same period when compared to the previous year.
Additionally, Griffin pointed out that receipts from PAYE income tax and national insurance payments for the period were £404.3bn, “up a whopping £24.3bn compared to the same period a year earlier”.
tom.dunstan@ft.com
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