IHT receipts climb to £3.9bn at financial year halfway point

The Government has now collected £3.9bn through inheritance tax (IHT) in the financial year so far, new figures published by HMRC have revealed.

Covering the period from April up to September this year, IHT receipts are around £400m higher than they were over the same period last year.

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 rise in interest rates that it is obliged to charge on overdue tax bills, following the recent increases in the Bank of England base rate.

“We are now halfway through the financial year and already IHT looks set to deliver another record haul for the Treasury, with the current tax take far higher than at the same point last year, and looking likely to exceed the OBR's full-year estimates,” commented group communications director at Just Group, Stephen Lowe.

“IHT may turn out to be the Government’s magic porridge pot, as the freeze on thresholds until 2028 combined with the 30% increase in property prices over the past six years push increasing numbers of estates into paying the tax.”

Tax partner at Evelyn Partners, Laura Hayward, added: “With the Chancellor warning this month that he will need to take ‘difficult decisions’ in November’s autumn statement given that public finances have worsened since the spring budget, the Treasury will be buoyed by the news that IHT receipts have shown yet another year-on-year increase. IHT receipts really are the gift that keeps on giving at a time when the Treasury needs to do all it can to bolster its coffers.

“The prospect of abolishing IHT has been bounced around as an idea for a Conservative election manifesto pledge and while the Chancellor has been playing down the prospect of imminent tax cuts, it’s not impossible that he could pull a small IHT rabbit out of the hat at the autumn statement, with something like a raising of the nil-rate band.

“An immediate concern for many families is that more and more are being dragged into paying IHT by stealth as a result of number of number of factors, including allowances being frozen until at least 2028 and inflationary growth of asset values.”

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