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Inheritance tax (IHT) receipts were £1.4bn for April and May 2024, a £200m rise compared to the same period last year.
In total, HMRC tax receipts for April to May 2024 were £132.8bn, which is £3.6bn higher than last year.
Quilter Cheviot chartered financial planner Rosie Hooper said that as frozen thresholds and inheritance tax policy had failed to keep up with inflation, she predicted these figures will continue to increase.
Hooper also highlighted that neither the Conservatives or Labour have committed to wholesale reform the UK’s IHT landscape and change what is “a creaking system badly in need of reform”.
However, Reform UK has pledged to abolish IHT for estates worth under £2m.
Hooper does believe that dropping the IHT tax rate to 30% could help alleviate the tax burden.
The Office for Budget Responsibility (OBR) has predicted that IHT receipts will continue to rise and forecast that the tax take will reach £9.7bn a year by 2028/29.
Nucleus technical services director Andrew Tully said: “These figures continue the strong upward trajectory in IHT receipts over the last few years. The current £325,000 nil-rate band has been at that level since 2009.
“The residential nil-rate band was introduced on a phased basis between 2017 and 2020 and potentially gives an additional £175,000 nil-rate band (making a total of £500,000) subject to certain rules. Both are currently intended to be frozen until 2028. Given all of this, the need for expert financial planning remains crucial.”
Tully did add, however, that financial advisers “can help manage an estate by setting up trusts, making use of gift allowances and using a pension to pass on wealth to family in a tax-efficient way”.
Wealth of Advice can help with all aspects of estate planning, to ensure more of your wealth is distributed to those you care about, rather than substantial sums being taken by the taxman. We offer impartial advice, always tailored to the individual client’s needs and circumstances. For a free copy of our guide to Estate Planning, visit Free Guide: Getting Your Affairs In Order (Estate Planning) | WoA (wealthofadvice.co.uk)
Alternatively, contact us for a free, no-obligation consultation. Tel. 0191 384 1008 or email enquiries@wealthofadvice.co.uk
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