OBR revises up Treasury’s forecast IHT intake

The Treasury is forecast to haul £45bn in inheritance tax (IHT) over the next six years, newly published estimates from the Office for Budget Responsibility (OBR) have indicated.

This is an increase of £2.9bn compared to the OBR’s estimates in its November statement.

The OBR has substantially increased its IHT estimates for the period between the 2022/23 and 2027/28 tax years, with a revised total tax take of £45bn up from autumn’s estimates of £42.1bn.

By 2027/28, the OBR is also estimated that 6.7% of deaths – which would equate to the deaths of 47,000 people – will trigger an IHT charge in this period. This up from an estimated 4.1% in 2020/21.

“Hidden in the small print of the Spring Budget is confirmation that IHT is becoming an increasingly lucrative source of funds for the Treasury,” commented group communications director at Just Group, Stephen Lowe.

“Since the November statement, tax take estimates have been revised up by almost half a billion pounds (£486m) every single year. What the Chancellor gives with one hand he, inevitably, takes with the other.

“While pension allowances soar as their restrictions were ripped away in this Budget, the freeze on IHT thresholds continues to hoover up an ever growing proportion of estates."

Lowe also noted that the figures mean approximately one in every 15 deaths are now expected to become liable for an IHT charge by 2027/28.

“That’s a major boost for government coffers,” he added.

“It is yet another reminder for people of the importance of regularly assessing the value of their estate. This should include getting an up-to-date valuation of any owned property given the substantial house price increases generated through pandemic. 

“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 that tax bill.”

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