HMRC has reported that it received £2.4bn worth of receipts for inheritance tax (IHT) between April and July.

The latest government figures confirmed this was around £300m higher than the same month four-month period last year.

Last month, HMRC reported that it had received £1.8bn in IHT receipts up to the end of June, meaning a further £600m was added to this total through the course of July.

A record total of high receipts in June 2022 can be attributed to a small number of higher-value payments than usual, HMRC stated.

Commenting on the latest IHT data, technical director at Canada Life, Andrew Tully, said: “This is a tax that is no longer just affecting the very wealthy in society and is increasingly catching out families who are unprepared or simply unaware.

“The frozen thresholds mean that HMRC has already doubled its tax take from IHT over the last 10 years. This surge will partly be driven by the ongoing increase in house prices, as residential property makes up the largest share of most estates. There has also been a higher volume of wealth transfers due to COVID – partly due to more deaths in the elderly population, but also as a result of higher asset values.
 
“Both the nil rate band and residence nil rate band are frozen until at least April 2026 so we can expect to see IHT receipts continue to rise.”

Tax partner at Evelyn Partners, Julia Rosenbloom, added: “Liz Truss, the favourite in the race to become the next Prime Minister, has made cutting taxes a prominent theme of her leadership campaign. However, it would be wrong to think that Truss and her Chancellor will cut taxes across the board if, as expected, she moves into Downing Street next month.

“Truss’s pledges to reverse the recent national insurance increase and the scheduled corporation taxes increases will be costly and given the pressures to commit spending to help ease the cost of living crisis, she will need to look elsewhere to shore up the Treasury’s finances. It’s not inconceivable that other taxes could be increased to help balance the books. Truss has pledged a ‘complete review of the tax system’ and confirmed that IHT would form part of that review, but what changes will be introduced is far from clear at this stage.    

“Against this uncertain backdrop, families could end up paying more tax than they need to if they don’t regularly review their tax planning and take a close look at the allowances available to them.”

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