IHT receipts show new year-on-year rise

IHT receipts for April 2022 to February 2023 were £6.4bn, which is £0.9bn higher than the same period a year earlier, according to the latest figures from HMRC. The figure was boosted by higher receipts in June 2022 and November 2022 which HMRC said can be attributed to a small number of higher-value payments than usual. The news comes amid new forecasts published by the Office of Budget Responsibility on the same day as the Chancellor’s statement which suggests IHT receipts will grow by almost £3bn higher than previously estimated over the next six years. The OBR now predicts that between 2022/23 and 2027/28 the Treasury will collect £45bn in IHT receipts, a rise from the £42.1bn estimate released in November. Commenting on the figures, Laura Hayward, tax partner at Evelyn Partners, said: “As today’s data reveals, IHT receipts are becoming an increasingly important way for the government to boost their coffers. The fact that the nil rate band – unchanged since it was increased to £325,000 from April 2009 – remains frozen until at least April 2028 represents a gift that keeps on giving for the chancellor. “The almost 20-year freeze in the nil rate band, coupled with inflationary growth of asset values, will see many families with moderate levels of wealth being drawn into the IHT net. Families that find they are being dragged above the IHT threshold may wish to consider taking relatively easy steps to manage their exposure to IHT.” She added: “Gifts you make to other individuals are generally not subject to IHT unless you die within seven years. There is also an annual gift allowance of up to £3,000 per tax year, and this will not be subject to IHT even if you do die within seven years. This £3,000 annual allowance can only be brought forward for one tax year, so if you have assets to spare you may want to consider using up this and last year’s allowance before 5 April. Families should also ensure they invest in the most tax-efficient manner possible. “The scrapping of the lifetime allowance for pensions in last week’s Budget will greatly increase the IHT breaks available for people with wealth to pass down to the next generation, as pensions are generally exempt from IHT. Therefore pensions could now be considered a vehicle for tax efficient death planning, without any intention of ever drawing the money out. But people should be aware that pension rules could easily be changed again in the future, only to find this tax advantage withdrawn at the point that it really matters.”