19 July 2024
If you are covering HMRC tax receipts and National Insurance contributions for the UK, please see the following comment from Rosie Hooper, chartered financial planner at Quilter Cheviot:
“The latest HMRC tax receipts reveal a significant increase in inheritance tax (IHT) and PAYE income tax and national insurance payments for May to June 2024. Inheritance tax receipts have risen to £2.1 billion, which is £83m higher than the same period last year. This increase continues the strong upward trajectory in IHT receipts over the last few years.
“Frozen tax thresholds, which show no sign of thawing under Labour, have failed to keep up with inflation leading to a continuous spike in the IHT take. The current £325,000 nil rate band has remained unchanged since 2009. The residence nil rate band, introduced on a phased basis between 2017 and 2020, potentially provides an additional £175,000 nil rate band, making a total of £500,000, subject to certain rules. Both thresholds are intended to be frozen until 2028.
“The Office for Budget Responsibility predicts that by 2028-29, the proportion of deaths leading to the payment of inheritance tax will increase to 6.3% – its highest level since the 1970s, having fluctuated between 2% and 6% for the past forty years. Given these projections, the need for expert financial planning remains crucial. Financial planners can help manage an estate by setting up trusts, making use of gift allowances, and using a pension to pass on wealth to family members in a tax-efficient way.
Income tax and NI
“Additionally, the latest figures show that receipts from PAYE income tax and national insurance payments for May 2024 to June 2024 are £108.5 billion which is £2.5 billion higher than the same period last year. With income tax allowances and thresholds remaining frozen until 2028, this figure is likely to continue rising.
“Although the government has cut national insurance, the combination of wage growth and frozen income tax thresholds has caused millions more people to pay higher income tax rates.”
