UK’s Inheritance Tax Harvests £644m in August

Inheritance Tax delivered a significant revenue of £644 million for the UK government in August. This figure is a notable increase compared to the £576 million accumulated in August of the previous year, showing a growing trend of the tax’s returns.

The period ranging from April 2023 to August 2023 has seen the government receipts from inheritance tax reach a staggering £3.2 billion. This accumulation stands £300 million higher than the same time frame one year prior.

How much is the Inheritance Tax expected to generate in coming years?

The Office for Budget Responsibility, often referred to as the OBR, has provided forecasts that suggests the Inheritance Tax revenues are on an upward trajectory. The tax is projected to yield £7.2 billion in the current financial year, and the OBR estimates that by 2027/28, the Inheritance tax might add as much as £8.4 billion to the Treasury’s coffers. Yet, despite these substantial figures, there are whispers that the tax might be scrapped altogether. Some rumours suggest that the government is considering this move to gain favour with the public ahead of the looming General Election.

What are experts saying about the Inheritance tax?

Stephen Lowe, the group communications director at retirement specialist Just Group, shed some light on the Inheritance Tax’s trajectory. According to Lowe, “Inheritance Tax receipts continue to swell the Treasury’s coffers as it generates record sums year on year. Frozen thresholds and property price increases are catching thousands more estates in the Inheritance Tax net.”

Earlier this Spring, the HM Revenue and Customs (HMRC) took the unprecedented step of significantly increasing its estimates for how many new estates will be liable for Inheritance Tax from 2021 to 2028. The tax authorities now believe that close to 50,000 new estates will find themselves facing the daunting reality of paying the tax, which represents an almost four-fold increase from their previous estimate in November 2022.

Advice for handling the Inheritance Tax

Reflecting on these increases, Lowe advised individuals to keep a close eye on the full value of their estate, including keeping up with the current valuation of their property. He suggested that professional and regulated advice could be invaluable for people looking to understand the total value of their estate, compute the potential tax they might face, and then explore available options to manage their bill effectively. This advice becomes even more pertinent as the tax net widens and captures more and more estates.