Govt’s IHT intake up to £4.1bn since April

The government has taken £4.1bn worth of receipts for inheritance tax (IHT) over the period between April to October this year, new HMRC figures have confirmed.

According to the data, this figure is £500m higher than in the same period last year.

IHT of 40% is usually chargeable if one’s assets exceed a certain threshold, after deducting any liabilities, exemptions and reliefs.

In his Autumn Statement last week, Chancellor Jeremy Hunt announced that IHT thresholds are to be frozen for a further two years until April 2028, in a move that will mean more people can expect to be caught in the IHT net.

The threshold, or the nil rate band, has been £325,000 per single person since 6 April 2009, while there is an additional transferrable main residence nil rate band of £175,000 available when passing the family home down to children or other direct descendants.

“The Chancellor’s decision to extend the freeze on the nil rate band for another two years to 2027/28, means the Treasury looks set to feast on these bumper IHT returns for at least the next five years,” said group communications director at Just Group, Stephen Lowe.

“We may not like the freeze on the thresholds for the next six years, but it does provide some certainty about what people can expect. We’d encourage people to make use of this and assess the value of their estate to understand if IHT is likely to affect them.

“There are ways to mitigate the impact of IHT and we’d recommend that people speak with a financial adviser to explore their options.”

CEO and founder of Wealth Club, Alex Davies, added that there has been a “total U-turn” on IHT over the last few months.

“From Liz Truss raising the hopes of the nation with a cut back in September, and now Jeremy Hunt announcing the extension of the freeze until 2028,” Davies commented.

“This is another stealth tax and the case of the boiling frog is apt. The Treasury hopes by leaving rates and allowances unchanged, inflation can do the hard work of turning the temperature up on tax payers without them noticing.

“Contrary to what many think, IHT doesn’t just affect the super-rich. It will be the thousands of hardworking families that will bear the brunt. Rampant inflation, soaring house prices and years of frozen allowances will magnify the tax take in the years ahead. More and more families are going to find themselves hit by death duties they might not expected or planned for.”

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