There have been renewed calls for changes to inheritance tax thresholds after the latest HMRC figures showed the government is on course to collect record receipts.
In the six months from April to November 2023, the Treasury collected £5.2bn, £0.4bn higher than in the same period last year.
IHT is on course to deliver £9bn for the treasury by 2027/28.
There was much speculation around IHT prior to the Autumn Statement last month. However, the chancellor made no changes to the nil rate bands or tax rate.
He instead opted to cut national insurance by 2%.
Canada Life tax and estate planning specialist Julia Peake said: “With the latest tax data showing that IHT has delivered weekly receipts of £158m, perhaps a status quo should come as no surprise given how much this tax has grown over the past few years.
“It’s important to remember IHT is not just a tax on the wealthiest in society, as many more estates are being caught in the expanding tax net.
“People think that they won’t be caught but with both the standard and resident nil rate bands remaining frozen until at least April 2028, and compounded by house price inflation, more people are finding that when their house becomes unencumbered by a mortgage it takes up most if not all of their nil rate bands.
“This results in other assets in their estate being hit by IHT. This will remain the case unless rumours of change materialise next year in the Spring Budget, with the unfreezing of thresholds.”
Richard Bate, partner and head of wills, trusts and estates at national law firm Weightmans, described it as “fiscal drag in action”.
“More and more families are being pulled into the IHT net as the value of estates grow but the tax thresholds remain frozen.
“IHT isn’t the only tax involved in wealth transfer – there can also be income tax and capital gains tax consequences too.”
He added: “It was suggested that the rules around IHT might be simplified at the Autumn Statement, but this didn’t materialise.
“We hope it’s revisited in future, as any simplification would only help more people plan to pass their money to loved ones, and plan with more confidence.”
Quilter tax and financial planning expert Shaun Moore said: “Inheritance tax receipts are expected to continue rising and we will likely see them beat the previous £7.1bn record before the end of the tax year.
“It had been widely rumoured that the government was looking to make changes to its IHT rules, but at least for now more families will be topping up government coffers as they are caught by the IHT net.
“IHT is a highly emotive tax that can split voters, so we can expect it to continue being a battleground policy for both the Conservatives and Labour as we near the general election.
“Though Jeremy Hunt opted not to make changes during his latest statement, we are expecting a budget to take place in March during which it could resurface if the Tories view it as a vote winner. Either way, some form of simplification of the tax is overdue.”
