Inheritance tax receipts rise 33%

Inheritance tax receipts rose 33% year on year between April and June to £1.5bn, according to recent data published by HMRC.

The £0.4bn rise in inheritance tax receipts comes at a time when the Government is considering how to fund the Chancellor’s economic support schemes during the Coronavirus pandemic in the run up to a Spring Budget.

Ami Jack, head of national tax at Smith & Williamson (part of wealth management and professional services group Tilney Smith & Williamson), said advisers and their clients should take a close look at their inheritance tax planning to make the most of current allowances before possible tax reforms are introduced.

Ms Jack said: “For some time there has been an expectation that an Autumn Budget was on the cards, which could have been an obvious time to introduce tax reforms to help pay for the cost of the pandemic. More recent rumours swelling around Westminster, however, suggest that a Spring Budget may be more likely to allow the Treasury to take stock of the economic impact of the current wave of Coronavirus.

“Whatever the date of the next Budget, families should take the opportunity to give serious thought to their tax planning and make the most of their current allowances before possible reforms are introduced.      

“It should be remembered that both the nil rate band and residence nil rate band have already been frozen until at least April 2026, meaning many families are already receiving increased IHT bills due to rising property and share prices. By considering options such as making gifts and investing tax-efficiently, there are a number of areas of tax planning that may help reduce or eliminate an IHT bill.”

There has been much speculation from many market commentators that Chancellor Rishi Sunak may choose to raise inheritance tax as part of his Spring Budget.

The Treasury published over 30 tax updates, consultations and documents, in March on what was dubbed Tax-Day – including plans to simplify inheritance tax red tape.

The update should cut inheritance tax red tape for over 200,000 estates every year by cutting down on the paperwork many families have to fill out.

Over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms when probate or confirmation is required from 1 January 2022.