The Government has taken £7.1bn in receipts for inheritance tax (IHT) for the 2022/23 tax year, new HMRC figures have confirmed.

Receipts for the period between April 2022 and March 2023 were around £1bn higher compared to the same period a year earlier.

HMRC has stated that its latest IHT intake for the year includes higher receipts in June and November, which has been attributed to a small number of higher-value payments than usual.

The number of estates in the UK that have been pulled into the IHT net has grown in the last few years, largely as a result of rising house prices, and particularly in London and the South East of England.

On top of this, in Jeremy Hunt’s Autumn Statement to the House of Commons last November, the Chancellor announced a freeze on the IHT threshold of £325,000 until April 2028, in a likely to push more estates over the IHT threshold in the coming years.

While there were no significant changes to the current IHT rules in Hunt’s Budget in March, forecasts published on the same day by the Office of Budget Responsibility (OBR) indicated that IHT receipts will grow by almost £3bn higher than previously estimated over the next six years. The OBR is now predicting that between the 2022/23 and 2027/28 tax years, the Treasury will collect £45bn in IHT receipts, a rise from the £42.1bn estimate released last November.

“IHT is no longer a tax only on the wealthiest estates,” said technical director at Canada Life, Andrew Tully. “As these record figures show, IHT has now become a mainstream tax on ordinary people, largely due to house price increases.

“With record amounts being banked by the Chancellor, and with the OBR forecasting IHT receipts will grow to a massive £8.4bn by 2027/28, people need to put their finances in order to avoid the tax man taking more than his fair share. Only then can people be confident they are passing on their wealth to their beneficiaries as tax efficiently as possible.

“Simple things such as setting up a trust, making use of gift allowances, and using your pension to cascade wealth very tax efficiently, can all help manage the value of your estate for IHT purposes.”

“The tax-free allowance is £325,000, so if you suspect your estate might be worth more than this, it is worth your while seeking expert financial advice. Don’t get caught out based on the assumption that you don’t have enough wealth to be hit by IHT.”

The IHT threshold, or the nil rate band, has been £325,000 per single person since April 2009, while there is also an additional transferrable main residence nil rate band of £175,000 available when passing a family home down to children or other direct descendants. The standard IHT rate stands at 40% and is charged on just the part of an estate above the threshold.

Tax partner at Evelyn Partners, Laura Hayward, added: “I’m currently seeing a lot of interest from clients wanting to pass wealth to the next generation in a bid to mitigate the impact of IHT. One option is gifting.

“Gifts you make to other individuals are generally not subject to IHT unless you die within seven years. There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to IHT even if you do die within seven years.

“However, many people I speak with also have concerns around control and protection when passing on wealth to the next generation, so I am increasingly seeing them consider tools such as family investment companies, offshore bonds and trusts, where this fits with the wider plans and motivations of the family.

“IHT needs to be carefully thought through and planned, especially where assets such as company shares, property and pensions are involved.”

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