Canada Life has suggested that Inheritance Tax (IHT) has “not been immune” to the financial impact of the coronavirus pandemic.
The tax specialist was responding to new data HMRC data that revealed IHT receipts dipped in 2019/20 compared to the previous tax year.
The figures showed that receipts for April to December 2020 were actually £0.1bn higher than in the same period a year earlier.
However, HMRC also revealed that it recorded lower receipts at the beginning of this year due to a “temporary issue” where it was unable to accept cheques for payment of IHT due to COVID-19 – an issue which has since been resolved and explains a peak in June receipts.
The higher number of receipts it recorded in recent months was expected, HMRC added, due to a higher volume of wealth transfers that took place during the early months of the pandemic, although HMRC also warned that this could not be verified until “full administrative data becomes available”.
In total, the latest figures showed that HMRC collected £633.4bn in taxes in 2019/20, an increase of 2.1% since 2018/19.
Commenting on the pandemic’s impact on IHT receipts, Canada Life tax and wealth specialist, Neil Jones, said: “Today’s results show that COVID-19 is continuing to have an impact on how HMRC is able to collect and receive across several taxes and it looks like IHT has not been immune to this.
“Results for the 2019/2020 tax year already show the beginning of a slight dip in IHT receipts which for the large part has been attributed by HMRC to their refusal to accept cheques in the early stages of the pandemic. A situation which has now been resolved.
“Interestingly, HMRC has also provided a glimpse into the IHT receipts received so far in the current tax year, finding that they are already up by £0.1bn on the same period the year before.
“If this trend continues we can expect IHT and other income and capital related taxes to start playing an increasingly important role, especially as we start to see falls in consumption taxes such as alcohol and fuel.”
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