His Majesty’s Revenue and Customs (HMRC) has released its latest update on Inheritance Tax (IHT) receipts, revealing a substantial increase in collections.
During the first seven months of the 2023/24 financial year, a total of £4.6bn was collected, marking a 12% increase compared to the same period in the previous year, when the collection stood at £4.1bn. This surge suggests that IHT is likely to set another record annual total for the Chancellor of the Exchequer.
The release of these figures comes just a day before the Autumn Statement. There has been speculation about potential IHT cuts proposed by Jeremy Hunt in the Budget, but recent rumours suggest that any such changes might be postponed until the Spring.
A study by Just Group highlights a significant gap in public understanding of IHT. The research shows that 59% of retirees over the age of 55 are unaware of the estate value threshold for Inheritance Tax liability, and 50% of this age group lack a clear understanding of the IHT rules.
Stephen Lowe, group communications director at retirement specialist Just Group, said: “As figures start to become available for the second half of the financial year, it is becoming increasingly clear that Inheritance Tax is on course to hit a record annual total for the third year in a row.
“At the current rate of tax collection, Inheritance Tax will raise over £7.8bn for the Treasury, far surpassing the OBR’s estimate for this year of £7.2bn as well as last year’s all-time high of £7.1bn.
“It’s a useful source of revenue for the government, and if rumours are to be believed, tomorrow’s Autumn Statement will see any potential cut to Inheritance Tax delayed until the Spring.
“Only a very small proportion of households are impacted by IHT, but the tax continues to raise more revenue for the Government, so it bites deep on those estates affected.
“Our research suggests there is a low level of understanding around the Inheritance Tax rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge.
“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 Inheritance Tax thresholds.
“Professional, regulated advice can also help people work out the total value of their estate, calculate how much tax they may be likely to owe and understand what options they have to manage their potential tax liability.”
