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The Government is set to collect record inheritance tax receipts this year, according to the latest figures.
The Treasury is on course to collect record receipts of £7.54bn, passing the previous record take £7.1bn collected last year.
HM Revenue & Customs data for April 2023 to February 2024 showed it hauled in £6.8bn inheritance tax (IHT) receipts, £400m above the same period last year.
Dubbed the “the most unpopular tax in the UK”, the increased tax take will fuel calls for its abolition. Its critics claim it represents double taxation, it is unfair, and hinders economic growth.
Nearly four per cent of estates each year pay inheritance tax but that number is growing fuelling its unpopularity. Government forecasts show IHT receipts will grow by more than a third over the next six years.
The OBR recently forecast IHT receipts would increase by 37 per cent driven by growing asset prices including shares and property.
Richard Bate, head of private wealth at Weightmans, said the rise reflected “‘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.
Nicholas Hyett, investment manager at Wealth Club said: “One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases is bringing more and more into the taxman’s sights.
“No one likes to pay more tax than they need to, and Inheritance Tax is among the least popular of all taxes. But with a little planning, there are a number of perfectly legitimate ways to reduce your liability – including some that should be front of mind as we approach the end of the tax year.”
Stephen Lowe, communications director at Just Group, said: “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 £564m leaving only £263m to be raised in March, in order for this year’s IHT take to exceed last year’s already record amount.
“Despite speculation that the Chancellor would tinker with the tax in the Spring Budget it was left alone – and with public finances so tight, it is little wonder.”
The HMRC figures show 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.
Chancellor Jeremy Hunt had been considering inheritance reform in the lead up to the spring statement but the plans to either cut the main 40 per cent rate or up allowances which protect against the levy, or scrapping it altogether, are now understood to have been shelved.
Families would have been spared £1.47bn had the £325,000 tax break risen with inflation each year since 2021.
Mr Hunt also left the 40 per cent levy untouched in the Autumn Statement despite pressure from many in his own party.
