21 June 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 figures from HMRC show receipts from PAYE income tax and national insurance payments for April 2024 to May 2024 are £77.2 billion, which is £2.8 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, wage growth has caused many more people to pay higher income tax rates.
"Similarly, inheritance tax receipts march ever higher and are £1.4 billion for April to May 2024, which is £0.2 billion higher than the same period last year. Frozen thresholds and inheritance tax policy has failed to keep up with inflation and therefore these figures will continue to increase. Sadly, neither Labour or the Conservatives have committed to wholesale reform the UK’s IHT landscape and change what is a creaking system badly in need of reform. Labour has in fact remained tight lipped on potential future changes to IHT and some reliefs might be on the chopping board if Labour wins.
"However, Reform UK has taken a significant stance on this matter, pledging to abolish inheritance tax for estates worth under £2 million. This does help stoke the debate, but is unlikely to become a reality anytime soon.
"Some measures that could help alleviate the tax burden include dropping the IHT tax rate to 30%. However, such a tax cut is unlikely to be a major vote-winner since only a small percentage of the UK public pays IHT.
"In the absence of significant reform simple measures such increasing the annual gifting allowance from £3,000 would help improve intergenerational wealth inequality, as more people would be incentivised to gift larger sums during their lifetime. The gifting allowance has been stagnant for decades and needs urgent review. This perhaps could help stop these huge monthly increases in one of Britain’s most hated taxes."
