Inheritance Tax receipts set to earn HMRC record-breaking amount of money | Personal Finance | Finance newsbhunt

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The Government is on track to bring in a record earning from inheritance tax this year after the Spring Budget left the tax untouched.

According to data from HM Revenue & Customs (HMRC) inheritance tax receipts reached £6.8 billion in the months from April 2023 to February 2024.

This is an increase of £400 million compared to figures from the previous year, meaning that the total IHT taken this year is only £300 million less than the 2022/23 record with the rest of the financial year yet to be taken into account.

This increase is largely the result of rising house prices pushing families that probably wouldn’t consider themselves wealthy, over the inheritance tax threshold.

For those paying IHT, Wealth Club calculations suggest the average bill could increase to £240,000 this 2023/24 tax year, with over 31,000 families having to hand over part of their inheritance to the taxman, a steep 12 percent increase from the £214,000 average paid just three years ago and a 15 percent rise in the number of estates paying the tax.

Stephen Lowe, communications director at Just Group, said: “With one-month of the 2023/24 financial year to go, IHT looks certain to record another all-time receipts high.

“The February receipts announced today were £564 million leaving only £263 million to be raised in March, in order for this year’s IHT take to exceed last year’s already record amount.

“Despite speculation that the Chancellor would tinker with the tax in the Spring Budget it was left alone – and with public finances so tight, it is little wonder.

“Frozen thresholds and the increase in property values have dragged more estates into paying the tax.

“We would encourage people to assess the entire value of their estate, including an up-to-date valuation of their property, and familiarise themselves with the IHT rules.”

Paul Barham, partner at accountancy firm Mazars, said: “IHT receipts are on track to rewrite the record books again in 23/24. Receipts are up £0.4 billion on last year with frozen thresholds and increasing asset wealth pulling more families across the threshold.

“But it’s not only IHT in the spotlight. Capital Gains Tax raises more significant money for the Treasury’s finances, and that is without the slashing of the tax-free allowances, which will kick in this April.”

Nicholas Hyett, investment manager at Wealth Club, said: “One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases is bringing more and more into the taxman’s sights.

“No one likes to pay more tax than they need to, and inheritance tax is among the least popular of all taxes. But with a little planning, there are a number of perfectly legitimate ways to reduce your liability – including some that should be front of mind as we approach the end of the tax year.

Mr Hyett recommends gifting as much as possible to ensure that inheritance tax will not be applicable to any money left over.

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