The Government’s inheritance tax intake totalled £600m in April 2023, a figure £100m up on the equivalent April 2022 figure, recent data published by HMRC has indicated.
This follows the record-breaking 2022/23 tax year which saw £7.1bn raised in inheritance tax.
HMRC’s figures have shown that the past two years have seen increases of 14% and then 17% in receipts, respectively, which are growing by nearly £1bn every 12 months. It is becoming the established pattern.
The number of estates across the UK that have been pulled into the inheritance tax net has grown in the last few years, largely as a result of rising house prices.
The increased tax hauls are likely being driven by a combination of frozen thresholds and rising property prices around the time of the pandemic. With the existing thresholds due to remain in place until 2027/28, the Treasury looks set to continue banking healthy inheritance tax receipts.
These figures should act as a warning for people to remember to assess the value of their estates, including an up-to-date valuation their property. People are also strongly advised to review their Wills and their draft inheritance tax calculation to ensure that the valuable Residential Nil Rate Band is not compromised. There is potentially additional inheritance tax of £140,000 awaiting those who make questionable assumptions.
Having last November announced a further freeze to the threshold of £325,000 until April 2028, the Government will likely push more estates over the inheritance tax threshold in the coming years.
No changes to the current rules were announced in Jeremy Hunt’s Budget in March 2023, but forecasts by the Office of Budget Responsibility indicated that between the 2022/23 and 2027/28 tax years, the Treasury will collect £45bn in inheritance tax receipts.
Given the inflationary growth of asset values coupled with frozen allowances, the rise and rise of inheritance tax receipts seems to be unstoppable. Unless you have developed a well-conceived and professionally driven mitigation strategy, of course.
Have a look at the latest figures at:
Stephen Parnham
June 2023
