Inheritance tax receipts reach £4.1bn

The Treasury has received £4.1bn in inheritance tax receipts between April and October 2022, £500m more than the same period last year, according to HMRC data.

This comes just days after the chancellor announced in his Autumn Statement that the threshold of £325,000 for inheritance tax would be frozen.

The continuing rise in inheritance tax takings for HMRC is believed to be largely down to increasing house prices. This is pushing more people above the threshold and costing them more money.

The average inheritance tax bill is currently £216,000, however research conducted by investment service Wealth Club shows that with this extended freeze combined with rampant inflation, average inheritance tax bills are conservatively estimated to reach £297,793 by 2025-26 and £336,605 by 2027-28.

Alex Davies, CEO and founder of Wealth Club, said: “There has been a total U-turn on inheritance tax over the last few months. From Liz Truss raising the hopes of the nation with a cut back in September, and now Jeremy Hunt announcing the extension of the freeze until 2028. This is another stealth tax and the case of the boiling frog is apt.

“The treasury hopes by leaving rates and allowances unchanged, inflation can do the hard work of turning the temperature up on taxpayers without them noticing. Contrary to what many think, inheritance tax doesn’t just affect the super-rich. It will be the thousands of hardworking families that will bear the brunt.”

Davies added: “Rampant inflation, soaring house prices and years of frozen allowances will magnify the tax take in the years ahead. More and more families are going to find themselves hit by death duties they might not have expected or planned for.”