Andrew Tully, technical director at Canada Life comments: “After the incredible spike in receipts the previous month, IHT levels have returned to slightly more familiar territory. The value of the tax is still just as important as it delivers £300 million more than the same period of time the previous year. This is a tax that is no longer just affecting the very wealthy in society and is increasingly catching out families who are unprepared or simply unaware. The frozen thresholds mean that HMRC has already doubled its tax take from IHT over the last 10 years. This surge will partly be driven by the ongoing increase in house prices, as residential property makes up the largest share of most estates. There has also been a higher volume of wealth transfers due to Covid – partly due to more deaths in the elderly population, but also as a result of higher asset values.
“Both the nil rate band and residence nil rate band are frozen until at least April 2026 so we can expect to see IHT receipts continue to rise.
“The legacy from the pandemic may mean more people are open to discussing estate planning with family. Good planning can help to reduce or mitigate IHT so it’s essential to get expert financial advice for tax efficient ways to pass wealth onto loved ones.”
Stephen Lowe, group communications director at retirement specialist Just Group, commented: “After a record-breaking opening quarter to 2022/23, frozen tax thresholds and property price increases continue to deliver bumper inheritance tax receipts for the Treasury compared with previous years.
“The Nil Rate Bands – the size of the estate that can be left without paying any inheritance tax – are set to remain frozen until 2026 and with even modest rises in property values, we can expect a higher proportion of estates to add to this growing source of revenue for the Treasury.
“As more estates trip into the Inheritance Tax threshold, it becomes increasingly important for people to assess the full value of their entire estate and seek help on how the tax rules apply to them.
“For some people, options such as lifetime mortgages can unlock a portion of the wealth tied up in bricks and mortar. Passing on this wealth through ‘living inheritances’ allows people to see the benefit for recipients and it can also help minimise the inheritance tax payable on their estates.
“Professional, regulated advice can provide invaluable help for people in working out how to manage their finances in later life, including how the value tied up in their property may impact their estate planning.”
https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk/hmrc-tax-receipts-and-national-insurance-contributions-for-the-uk-new-monthly-bulletin
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