Inheritance Tax Receipts Dramatically Rise Again – The Effect on Planning

Recent data provided by HM Revenue & Customs reveals that inheritance tax brought in £557m in September 2022.  That takes the overall tax-take in this area to £3.5bn in the first half of the 2022/2023 tax year.  This is a new record that far exceeds previous highs.

Inheritance tax surpassed £6bn in 2021/22 for the first time ever with the current tax year now set to post consecutive all-time high tax-takes.  This trend has been anticipated over the last few years.  It is no surprise.

Inheritance tax continues to account for ever-increasing receipts for the Treasury. Frozen thresholds and rising property prices have combined to push an increasing number of estates into paying inheritance tax.

The nil rate bands – the size of the estate that can be left without paying any inheritance tax – are due to remain frozen until at least 2026 and, with government struggling to fill a fiscal hole, the likelihood of any increase in inheritance thresholds before (or after) then is largely wishful thinking.

It is yet another reminder, if any were needed, of the importance for people to regularly assess the full value of their estate so they get a clear picture of whether and to what extent inheritance tax will affect them … and to start to understand the steps they can take to mitigate it. Mulling the financial press every week and failing to take specialist professional advice is completely ineffective.  For some people, options such as lifetime mortgages could be an opportunity to unlock a portion of their wealth tied up in bricks and mortar, for instance. Passing this wealth on through ‘living inheritances’ allows people to see the benefit for recipients – particularly if it helps loved ones through the current cost-of-living crisis, and it can minimise the inheritance tax payable on their estates.

This further year-on-year increase in inheritance tax receipts is very welcome to a Treasury that has the difficult task of attempting to balance the books. Given the current state of the UK economy and a desperate need to boost government revenue, Chancellor Jeremy Hunt will want to do all he can to preserve benign cash cows, such as inheritance tax receipts, until stability is restored to the nation’s finances.  Families face the bleak reality that even if the inheritance tax regime remains unchanged in the months and years ahead, more people will be pulled within its remit.

I would draw readers attention to a topical conflict of opinion within the financial adviser community. Research conducted by Puma Investments this month indicates that 57% of financial advisers believe that the current financial crisis will compromise gifting strategies as taxpayers cling onto their assets fearing that they may ultimately regret giving them away.  However, more than a third of advisers (37%) believe that gifting strategies will instead become more appealing for taxpayers looking to help loved ones with their immediate financial pressures.  A good point.

It does, of course, depend on individual circumstances and the mindset of those involved whether any kind of gifting strategy is a practical one.  Mindset is equally important as circumstances and detail when it comes to effective planning in this area as I explain in my bestseller, ‘The Absolute Essence of Inheritance Tax Planning’ which you can pick up in either paperback or kindle format. 

Without an appropriate mindset most taxpayers are simply ‘stuck’ and fail to take any effective affirmative action whatever the financial climate.

Do have a look at the Puma research and draw your own conclusions.  Here is a useful summary –

And a link to ‘The Absolute Essence’ –


Stephen Parnham