The jump in its estimates, from £4.7bn in the tax year 2016/17 to £6.2bn in 2021/22, was contained in the OBR’s Economic and Fiscal Outlook report issued alongside last week’s Spring Budget.
“IHT receipts were unusually high in 2015-16, reflecting more deaths in 2014-15 (the majority of IHT receipts are received with a six to 12-month lag) and a number of payments from very high value estates. Receipts have been revised up over the forecast period due to slightly higher equity and house prices,” the report said.
The OBR also factored in the UK government’s plans to change the fees payable for an application for a grant of probate. The new rates come into effect in May and range between £300 and £20,000, depending on the value of the estate.
This reduced its inheritance tax forecast by around £30m a year to “reflect the incentive for individuals with estates worth close to the thresholds in the new probate feestructure to reduce the value of their estates (through genuine or contrived means) to remain within a lower fee band”.
