Inheritance tax receipts are on a trajectory to "break all previous records" as they continue to rise year-on-year, according to recent data from HMRC.
In its monthly bulletin for tax receipts and National Insurance contributions, HMRC revealed inheritance tax receipts for April to December 2023 reached £5.7bn.This represented a £0.4bn increase on the same period the year before.
Canada Life tax and estate planning specialist Stacey Love said this data shows IHT receipts were “on a trajectory to break all previous records”. A similar sentiment was shared by Just Group group communications director, Stephen Lowe, who said it is “evident that the chancellor can once again bank on record-busting IHT receipts for a third successive year”.
Lowe additionally explained that freezing the thresholds has “dragged more households into paying inheritance tax”, especially when combined with the property price rises of the past five years or so.
He predicted that, at the current rate of collection, IHT will raise around £7.6bn for HM Treasury this financial year, surpassing the OBR’s forecast of £7.2bn as well as last year’s all-time high of £7.1bn.
But Love cautioned that, while records might be broken, in reality IHT yields far less for the Treasury than other wealth taxes, for example capital gains tax.Lowe also looked ahead, predicting the rumour mills will go into “over-drive” ahead of the Budget around the future of IHT.
The increased IHT receipts contributed to total HMRC receipts increasing by £26bn on a yearly basis with total receipts for April to December 2023 reaching £580.8bn.
Additionally, income tax, capital gains tax and national insurance contributions receipts for April to December rose to £313.5bn.
This was an increase of £12.8bn on the same period last year.
PAYE Income Tax and NIC1 receipts rose to £294.5bn, an increase of £13.4bn on a yearly basis but the bulletin cautioned that the effect from changes to NICs rates from January 6, 2024 will affect receipts from February onwards.
tom.dunstan@ft.com
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