22 January 2025
If you are covering the latest HMRC tax receipts and national insurance contributions figures, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:
Inheritance tax receipts rise yet again
“HMRC’s latest figures show that inheritance tax receipts for the period of April to December 2024 have climbed to £6.3 billion which is £0.6 billion higher than the same period last year.
“This relentless rise is no coincidence. With inheritance tax thresholds frozen until 2030, more families are being pulled into the scope of IHT, and this trend shows no signs of slowing. Add to that the significant changes coming in April 2027, when pensions will be drawn into taxable estates, and the government looks set to cash in on an ever-expanding pool of taxpayers.
“Farming families, too, could face tougher times as reductions to Agricultural Property Relief start to bite, potentially forcing some to make difficult decisions about the future of their farms. Meanwhile, tweaks to Business Relief and AIM share rules are also likely to keep boosting HMRC’s coffers in the years ahead.
CGT surges
“Capital Gains Tax receipts continue their upward trajectory, reaching £335m in December 2024. The increase is driven by taxpayers taking action ahead of anticipated tax changes, coupled with the effects of a reduced CGT annual exempt amount. From April to December 2024, total CGT receipts stand at £1.85bn, up from £1.44bn during the same period the year before.
“With the Annual Exempt Amount shrinking to just £3,000 and rates rising, the room for manoeuvre is tightening. For those with significant assets, timing has become everything. However, after this initial rush we may see a slow down as people sit on their assets reluctant to deal with the new rates.
PAYE and NICs receipts soar
“PAYE income tax and National Insurance contributions continue to deliver for the Treasury, with receipts hitting £311.4bn so far this tax year which is £8.6 billion higher than the same period last year. Changes to employer NICs, including higher rates and a reduced earnings threshold, are steadily increasing the tax take and will likely remain a key revenue stream for the government.
“Frozen thresholds are doing the heavy lifting for the Treasury, steadily drawing more taxpayers into higher tax bands. The government’s reliance on fiscal drag to swell its coffers is becoming more apparent with each passing month. It’s a strategy that avoids the political backlash of raising headline rates but leaves taxpayers paying more nonetheless. However, thresholds will thaw in April 2028 which will come as a welcome relief.
“As the tax burden grows heavier, so too does the need for tailored financial planning. With these pressures mounting, it’s more important than ever to ensure financial decisions are carefully considered and aligned with long-term goals.”
