22 August 2023
If you are covering the latest HMRC tax receipts and National Insurance contributions statistics, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
“Latest HMRC figures show that bereaved families are increasingly filling government coffers due to frozen inheritance tax thresholds.
“The Chancellor’s IHT threshold freeze was extended last autumn until at least April 2028 and is set to rake in record amounts by stealth. IHT receipts from April to July 2023 reached £2.6bn, £0.2bn higher than the same period last year. The total inheritance tax take for tax year 2021-22 was £6.1bn, meaning this year’s take is well on course to break new records and could get close to £8bn.
“In many cases higher property prices is helping lift the number of households falling in the scope of IHT. While growth has slowed in the housing market, it hasn’t yet seen the drop in prices some were expecting. The average UK home has more than tripled in value over the past two decades from £84,620 in 2000 to £288,000 today, fast approaching the frozen inheritance tax nil rate band of £325,000.
“Without proper planning, many people could now find themselves in a position where they end up paying inheritance tax unnecessarily, as they may never have previously considered the need for inheritance tax planning and therefore have not taken the steps required to mitigate it. There are many actions you can take including utilising annual gifting allowances, giving away assets to a spouse and navigating the fiendishly complex residence nil rate band, which can allow married couple to pass £1m free of inheritance tax to loved ones.
“The freezing of inheritance tax forms part of a broader strategy of fiscal drag by this government, which has frozen income tax thresholds, capital gains tax allowances, dividend allowances and the amount you can take tax-free from your pension to boost revenues.
“The latest figures show receipts from PAYE income tax and national insurance payments for April to July 2023 were £138.7bn, which is up £8.3bn compared to the same period a year earlier. Given the threshold for the additional rate of income tax has reduced from £150,000 to £125,140, we can expect further rises in coming months.”
