Between April and December, IHT receipts reached £6.3bn, an increase of £0.6bn when compared to the same period last year, according to data from HM Revenue & Customs (HMRC).
Increasing asset prices, the freezing of tax thresholds – which was extended for another two years in the Budget – and additional changes to IHT rules are all to blame for the rise.
IHT is applied at a flat rate of 40 per cent on estates worth over £325,000, but the system includes many loopholes, meaning the effective rate is often much lower.
She also announced that, from April 2027, inherited pension pots will be subjected to IHT and farms will have to pay the tax for the first time.
The OBR has estimated that policy changes announced at the Budget will add £2.5bn in IHT receipts by 2029-30.
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Read More“The nil-rate band (NRB) and the residence nil-rate band (RNRB) have not been adjusted for inflation or rising property values, which means more estates are becoming liable for the tax as asset values increase.
Shaun Moore, tax and financial planning expert at Quilter, said the “relentless rise” is no coincidence.
“Add to that the significant changes coming in April 2027, when pensions will be drawn in to taxable estates, and the Government looks set to cash in on an ever-expanding pool of taxpayers.
“Meanwhile, tweaks to business relief and AIM share rules are also likely to keep boosting HMRC’s coffers in the years ahead.”
CGT bills totalled £332m in December, and there has now been a £410m increase in tax take between April and December 2024 compared to the same period the year before, figures have revealed.
Moore said that changes to employer NICs in the Budget – the rate will increase from 13.8 per cent to 15 per cent in April – is steadily increasing the tax take and will “likely remain a key revenue stream for the Government”.
“The Government’s reliance on fiscal drag to swell its coffers is becoming more apparent with each passing month.
“It’s a strategy that avoids the political backlash of raising headline rates but leaves taxpayers paying more, nonetheless. However, thresholds will thaw in April 2028 which will come as a welcome relief.”
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