23 May 2023
If you are covering the latest HMRC tax receipts and National Insurance contributions statistics, please see the following comment from Rosie Hooper, chartered financial planner at Quilter:
“The latest figures from HMRC show that following a record-breaking £7.1 billion inheritance tax take in the 2022/23 tax year, the trend has continued with receipts for April 2023 sitting at £0.6 billion - £0.1 billion higher than the same period a year earlier.
“Historically IHT was viewed as a tax only for the very wealthy, but frozen tax thresholds and elevated house prices have seen far more people caught by the IHT net. The Chancellor’s extended freeze has already proven effective, raking in a significant amount by stealth with a £1.0 billion increase in the inheritance tax take in the 2022/23 tax year. If the current pattern continues, we can expect to see a similar increase this tax year.
“IHT is a hated tax and the ever-increasing tax revenue from IHT presents a conundrum for the government now we are possibly only a year from a General Election. Rumours are already rife regarding potential policy changes the government might enact to improve their chances of winning the next election, and some reports suggest inheritance tax may be ripe for reform. Considering it is a growing revenue generator, this government might find the prospect of lowering the tax a bitter pill to swallow, but there it would be likely to drum up support.
“Elsewhere, the latest figures show receipts from PAYE income tax and national insurance payments for April 2023 were £40.4 billion – starting the tax year with a significant £2.5 billion boost compared to the same period a year earlier. Given the threshold for the additional rate of income tax has now reduced from £150,000 to £125,140, we can expect this figure to rise even further in the coming months.
“Income tax levels are frozen until 2028, and thanks to fiscal drag more people will move up the income tax bands as their pay increases. This will give government coffers a considerable uplift, and this morning’s figures show this is already well underway. With inflation still sky high, we can expect wages to continue rising further and so too will the government’s tax take due to the static thresholds.
“With unwelcome and often unexpected IHT bills rapidly becoming more commonplace, seeking professional financial advice is highly important. IHT is a complex area of financial planning, particularly when it comes to the rules and restrictions of certain aspects such as the residence nil rate band, so professional support can help you plan appropriately and mitigate costs.”
