Inheritance tax receipts soar ahead of Autumn Statement
Inheritance tax receipts have increased by 38% since the pandemic, up by 17% in the last year alone, analysis by probate broker Final Duties has found.
It was heavily rumoured that the government could cut inheritance tax in today’s Autumn Statement, though The Independent has since claimed such a move is now “off the table” for at least a year.
Inheritance tax is a 40% tax on the estate of those who have passed away, however, it is only applied to the amount above the threshold of £500,000 if passed to the children or grandchildren of the deceased, while no tax is owed if the estate is passed to a spouse, civil partner, charity or community amateur sports club. If the estate is passed to someone that doesn’t fall within any of these categories, tax is charged on anything above the threshold of £325,000.
Jack Gill, managing director of Final Duties, said: “There were hopes that we might see a cut to inheritance tax in this week’s Autumn Statement, although these hopes seem to have now faded, with the Government more likely to focus on other tax incentives to better boost their popularity ahead of the next general election.
“This is disappointing given that inheritance tax is arguably no longer a tax on the wealthy and more and more of us face falling foul of it as our estates grow in value and become liable.
“This is largely due to the over stimulation of the property market in recent years which has pushed house prices to record highs. With property forming the majority of the average person’s estate, the increase in the value of their property is pushing them into inheritance tax territory.”
During 2022/23, some £7.1bn was collected in inheritance tax receipts by HMRC. While this equates to just 0.90% of total HMRC tax receipts for the year, it’s the second highest proportion seen over the last decade.
In 2019/2020, prior to the pandemic, inheritance tax receipts totalled 5.1bn, marking a -4.4% drop on the previous year.
Since then, however, the only way has been up when it comes to the level of inheritance tax paid by the nation.
In fact, the total value of annual receipts grew by 4% in 2020/21, then by 14% in 2021/2022.
Last year, the £7.1bn collected marked a huge 17% year on year increase and this latest annual total sits some 38% higher than the pre-pandemic benchmark of 2019/2020.