HM Revenue & Customs (HMRC) revealed that inheritance tax (IHT) receipts from April to September 2021 were £3.1bn ($4.2bn, €3.6bn).
This seems to be a growing trend since, in July 2021, the taxman reported a nearly 3.7% increase in IHT receipts for the 2020-21 financial year at £5.35bn.
The latest figures show a £700m (29%) rise from the first half of the previous tax year as well.
Heather Owen, financial planning expert at Quilter, said: “Figures released today show inheritance tax receipts continue to be profitable for the Treasury. With the budget fast approaching, the rumour mill has begun and questions surrounding inheritance changes are beginning to form, with some suggesting, or perhaps hoping, it could be scrapped altogether.
“Families hit earlier in the year by the nil rate band and residence nil rate band freeze at existing levels until April 2026, at £325,000 and £175,000, respectively, will likely be hoping for reform.
“While inheritance tax raises relatively little in comparison to the Chancellor’s growing list of spending projects, a change of this magnitude is highly unlikely as the Treasury needs every penny it can get right now.”
Andrew Tully, technical director at Canada Life, believes that, as IHT receipts keep growing, “now is the time to put in place effective estate planning”.
Tax raid in the Autumn budget?
Julia Rosenbloom, tax partner at professional services firm Smith & Williamson, said: “The government continues to need to raise funds to pay for the costs of covid-19 support schemes as well as reform commitments in other areas such as health and social care, while also dealing with the challenges posed by soaring energy costs.
“Ahead of next week’s budget, chancellor Rishi Sunak will therefore be looking closely at all possible areas he can tap for additional revenue, not least from personal taxes such as IHT which have shown yet another uplift, to boost the Treasury’s spending power.
“Prime minister Boris Johnson’s recent announcement introducing a new health and social care levy, which broke a manifesto commitment, demonstrates that the government is not afraid of tax rises.
“Whether any reforms to taxes are announced next week or at a later date, the outlook as to how individuals and businesses will be taxed in the coming years is far from certain. There have been a number of reports published by the likes of the Office of Tax Simplification as well as an All-Party Parliamentary Group on how IHT could be reformed, which present the chancellor with plenty of possible options for change.
“Areas of focus in the studies have included the rules on lifetime gifts, the exemptions, and the CGT-free uplift on death.
“Given the uncertain outlook for taxes, I’d encourage people to start thinking about their tax planning sooner rather than later and make the most of current allowances before any changes are introduced. Investing tax-efficiently and considering options such as gifting could ensure that more of your assets are passed on to family members or charitable causes.”
