Inheritance Tax receipts at record levels
Wednesday 10th January 2024
Katy Baxter
Inheritance Tax continues to be a political hot potato with some commentators predicting it might be reduced or eliminated by the present Chancellor. One thing is for sure - current rates of revenue continue to raise funds for the government to increasing record levels. In the eight months from April to November 2023 data from HM Revenue and Customs showed receipts had totalled £5.2billion. This is a significant amount of income for HMRC and so it's quite hard to imagine this will be cast aside, and with a potential change in government coming this year I would not expect Sir Keir Starmer and Rachel Reeves to be abandoning this valuable source of tax revenue.
Currently 4%, or 1 in 25 estates, pay Inheritance Tax. The Institute of Fiscal Studies predicts that as the wealth of older people increases, driven largely by higher house prices, this number is set to rise by over 7% by 2032-33. By the end of this decade, Inheritance Tax is on track to raise £10billion according to the Government although the IFS thinks receipts could be nearer £15billion a year in the next 10 years. Predictions by the Office for Budget Responsibility show Inheritance Tax receipts will reach £7.6billion for the current tax year which will be an increase of 7.5% on last year.
There are lots of figures and predictions here but the key point is that this is a tax that continues to catch more and more people as thresholds are frozen and wealth increases. However, with professional advice and good planning this is one tax that can potentially be reduced, eliminated or covered so that assets and wealth can be passed effectively to future generations. This is no longer a tax impacting the so called 'rich' as those living in fairly modest homes and with a relatively small level of savings can easily be affected. It is a good time to start thinking about this and understanding what the impact might be for you and your loved ones.
Sometimes small actions can make a big impact to the amount of Inheritance Tax your loved ones will have to pay, and taking action sooner rather than later gives a wider range of potential solutions.
If you think that your estate may have a potential liability, please do contact us and we can discuss ways to help you.