HMRC’s IHT intake hits £4.6bn ahead of autumn statement

HMRC took in £4.6bn worth of inheritance tax (IHT) receipts in the period between April to the end of October this year, new figures have shown.

This total is around £500m higher than for the same period last year.

HMRC’s latest figures come just a day before the Chancellor, Jeremy Hunt, will deliver his autumn statement in the House of Commons. Rumours among economic experts in recent weeks have circulated around IHT, from potential changes to the thresholds to abolishing the tax altogether.

More estates have been dragged into paying IHT as a result of the nil rate band, which is also known as the IHT threshold, remaining frozen at £325,000 until at least April 2028. This is the amount up to which an estate has no IHT to pay.

The current period also includes the IHT receipts in June, which was the highest monthly total on record. HMRC suggested this could be due to possible effects from the recent cycle of rising interest rates, that it is obliged to charge on overdue tax bills.

Tax partner at Evelyn Partners, Laura Hayward, said the Treasury will “welcome the news” that IHT receipts have shown another year-on-year increase.

“All eyes are now on whether IHT will get a mention in the Chancellor’s autumn statement tomorrow,” she commented. “While abolishing IHT completely would be a popular move with many, it seems more likely that the Government will reserve this as an idea for a Conservative election manifesto pledge.

“If the latest reports are to be believed, cuts to IHT are likely to take a backseat to other possible tax changes in tomorrow’s autumn statement. However, with Hunt noting that ‘everything is on the table in an autumn statement’ it’s not impossible that we could still see changes of sorts to the IHT charging regime announced tomorrow.”

There has been some speculation that there could be a cut to the rate charged, which is currently levied at 40% on estates above the value of £325,000. Some have also suggested that the main nil-rate band, currently £325,000, could be combined with the residential nil-rate band allowance, currently £175,000 to give a total IHT-free allowance of £500,000.

“Many will be hoping for changes here given that more and more families are being dragged into paying IHT by stealth as a result of the frozen allowances, inflationary growth of asset values and other factors,” added Hayward.

Group communications director at Just Group, Stephen Lowe, commented: “Only a very small proportion of households are impacted by IHT, but the tax continues to raise more revenue for the Government, so it bites deep on those estates affected. Our research suggests there is a low level of understanding around the IHT rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge.

“We would encourage people to assess the entire value of their estate, including an up-to-date valuation of their property, and familiarise themselves with the IHT thresholds. Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage their potential tax liability.”

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