Inheritance Tax Receipts reach £3.2Bn from April to August 2023, up £300M from same period year earlier

The newest figures from HM Revenue and Customs present that inheritance tax receipts elevated to £3.2 billion within the 5 months from April 2023 to August 2023.

This is a £300 million enhance from the same period within the earlier year, and continues the upwards development during the last decade.

One in each 25 estates pay inheritance tax, however the freeze on inheritance tax thresholds, many years of home worth will increase and excessive inflation are bringing increasingly estates above the brink.

For these which can be paying this loss of life tax, Wealth Club calculations recommend the typical invoice might enhance to simply over £234,000 this 2023/24 tax year. This is a 11% enhance from the £214,000 common paid simply three years in the past.

Inheritance tax is often paid at a price of 40% over sure thresholds, though you may go on cash IHT free to your partner or civil accomplice, who will then additionally inherit your allowance for once they go away. The foremost threshold is the nil-rate band and applies to the overwhelming majority of individuals within the UK, enabling up to £325,000 of an property to be handed on with out having to pay any IHT. That has been unchanged since 2009. However, there’s additionally a Residence Nil Rate band value £175,000 which permits most individuals to go on a household house extra tax effectively to direct descendants, though this tapers for estates over £2 million and isn’t obtainable in any respect for estates over £2.35 million.

Nicholas Hyett, Investment Manager at Wealth Club stated: “The Treasury raked in an additional £300 million from inheritance tax from April to August 2023, in contrast to the same period a year earlier. This enhance is being fuelled by years of hovering home costs and frozen allowances.

While simply 4% of estates pay inheritance tax for the time being, given the nil-rate and residence nil-rate bands have been frozen for years individuals with extra common incomes and common worth houses will finish up getting caught out by this most hated of taxes. Moreover, with the federal government’s pockets beneath stress from all angles, there’s unlikely to be any respite quickly.

The excellent news is that there are nonetheless a number of reputable methods to go on cash freed from inheritance tax, which is why inheritance tax is referred to as a ‘voluntary tax’ in some circles.”

Paul Barham, Partner at Mazars commented: “The IHT nil rate freeze has been worth its weight in gold for the treasury boosting the government’s coffers by £3.2 billion in April to August. This, in combination with high asset values across property and investments, means HMRC is well on its way to another record IHT year. Although, the future of IHT is under the spotlight with rumours that it could be scrapped altogether come 2024, you can’t plan your finances on speculation and people should look at ways that they can reduce their potential IHT liability. Maximising personal gift allowances, and doing so early, having a valid will and using clear expression of wishes documents are steps that are often overlooked. The latest figures are a timely reminder to pay these some attention.”