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The Treasury received £5.7bn in inheritance tax receipts in the nine months from April to December 2023, according to new figures from HMRC.
This is £400m more than the same period the year prior, continuing the upward trend.
According to Wealth Club, one in every 25 estates pay inheritance tax, but the proportion of families affected is higher, and the freeze on inheritance tax thresholds paired with decades of house price increases is pushing the tax-take on an upwards trajectory.
Wealth Club said the average bill could increase to £239,000 this 2023/24 tax year, with over 30,000 families having to hand over part of their inheritance to the taxman.
This is a steep 11.5% increase from the £214,000 average paid just three years ago and a 14.4% rise in the number of estates paying the tax.
Nicholas Hyett, investment manager at Wealth Club, said: “The government’s income from death duties is going up. That makes changes to IHT policy a careful balancing act. Cutting rates might win votes, since many see IHT as an unjust grab for money that’s already been taxed once. But the revenue earned is playing an important part in the government’s spending programme, and a shortfall would need to be made up somewhere else.
“Contrary to popular belief, inheritance tax doesn’t just affect the super-rich. Frozen tax brackets mean many who would not consider themselves wealthy will find themselves falling into the IHT bracket in future. Their standard of living hasn’t changed, indeed inflation means it might have gone backwards, but the government now considers them to be wealthy enough to face inheritance tax.”
He added: “Even at its current level, IHT affects more families than it appears at first glance. While only 4% of deaths result in an IHT charge, a lot of that is because there is no IHT due when estates are passed on to a spouse. It’s on the death of the spouse that an IHT bill falls due. That suggests the number of families affected is more like 7% or 8%.”
