HMRC’s IHT receipts total £1.1bn for April and May

Receipts received by HMRC for inheritance tax (IHT) totalled £1.1bn for the months of April and May, new figures have revealed.

This total is around £100m higher than in the opening two months of the tax year in 2021.

HMRC reported last month that it had received £500m in IHT receipts during April, meaning a further £600m has been raked in by the government in May.

Commenting on the figures, group communications director at Just Group, Stephen Lowe, highlighted that while only a small proportion of people pay IHT, the amount being paid has more than doubled in a decade from under £3bn to more than £6bn in 2021/22.

“One reason is that the nil rate band – the size of the estate that can be left without paying any IHT – has been frozen at £325,000 since 2009,” Lowe said. “If it had risen with the general rise in prices, it would be more than £100,000 higher today.

“The monthly receipts data also shows that the phased introduction of the residential nil rate band between 2017/18 and 2020/21, an additional tax-free threshold for those leaving homes to children, has not stopped the continued rise in the amount of IHT being raised.

“Typically, the value of a residential property is the main reason why estates are pushed over the IHT thresholds and the recent house price boom across the UK means many people could be approaching or surpassing the threshold without realising. However, there are options available such as lifetime mortgages that can help people pass on that wealth while still alive to see the positive effect it can have on loved ones.”

Canada Life technical director, Andrew Tully, added that IHT is continuing to prove itself as a “valuable tax” for HMRC.

“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 some people make outright gifts to help family during this difficult period,” Tully commented.

“The legacy from the pandemic may mean more people are open to discussing estate planning with family. Good planning can help to reduce or mitigate IHT so it’s essential to get expert financial advice for tax efficient ways to pass wealth onto loved ones.”

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