Despite weeks of press speculation based on wishful thinking, the following few sentences appeared on the government’s website a few seconds after the Chancellor sat down from giving his Autumn Statement on 22 November:
“Inheritance tax nil-rate band and residence nil-rate band – The inheritance tax nil-rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further 2 years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2 million. Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an inheritance tax liability. The government will legislate for these measures in Autumn Finance Bill 2022.”
On the face of it then this looks like a tax which the present government sees as continuing until the next general election and continuing in its largely unchanged present form. This is not surprising at all. The government is on course to collect record inheritance tax receipts for the third year in a row.
HMRC’s latest update show that £4.6bn was collected through the first seven months of the 2023/24 financial year (April to October). This represents a 12% increase on the £4.1bn collected in the first seven months of 2022. This is a tax which is becoming a rising star for governments seeking to increase Treasury coffers.
It is estimated that at the current rate of tax collection, inheritance tax will raise over £7.8bn for the Treasury – £700m more than last year’s all-time high of £7.1bn.
The Office of Budget Responsibility predicts that the inheritance tax take will be £8.4bn in 2027/28. Receipts are set to continue growing strongly, despite slower house-price growth, and may well exceed those OBR predictions.
Have a look at the data for yourself: