More people than ever hit by Inheritance Tax bills as HRMC posts record IHT receipts
More people than ever before are feeling the bite of inheritance tax as HMRC has posted a record-breaking high for inheritance tax receipts..
HMRC has earned an impressive £6.4bn from inheritance tax in the 2022/23 tax year to date, setting a new record in the process.
What’s even more remarkable is that this has comfortably surpassed the £6.1bn in IHT receipts for the entire 2021/22 tax year – and this gap is set to increase further as there is still a month of further receipts to take into account before the end of the tax year.
Thanks to these record-breaking receipts, it is now estimated that the Treasury could earn as much £45bn in inheritance tax receipts in the 5-year period from 2022/23 – 2027/28, up £2.8bn from previous estimates.
This is because the current inheritance tax nil-rate band of £325,000 was recently confirmed to remain frozen until 2028 by Chancellor Jeremy Hunt in his 2023 Spring Budget. This nil-rate band has remained unchanged since it was introduced in April 2009, despite rising house prices and record inflation. All this means that an increasing number of people will fall foul of an inheritance tax charge in the coming years. In fact, it is now estimated that by 2027/28, 6.7% of deaths (numbering around 47,000 deaths) will trigger an inheritance tax charge. This would represent a notable increase from the roughly 4.1% of deaths affected in 2020/21.
Dicky Davies, Business Development Director and Co-Founder of Tower Street Finance said: “These record-breaking inheritance tax receipts posted by the Treasury are not a surprise. It’s clear that HMRC sees IHT has a big earner and with the recent government expenses caused by the COVID-19 Pandemic and the cost-of-living crisis, it’s unlikely this attitude will change any time soon.
“But as rising house prices and inflation drive the value of people’s assets and estates up, more and more people are going to be faced with an unwelcome IHT bill in the coming years – something that can pose a financial challenge to executors and beneficiaries. This is where products like our Inheritance Tax Loan can be a real help, by funding the cost of the IHT bill and enabling people to unlock an estate and access their inheritance with no risk to themselves.”