22 May 2024
If you are covering the latest HMRC tax receipts and National Insurance contributions statistics, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:
"The latest figures from HMRC show receipts from PAYE income tax and national insurance payments for April 2024 are £44.2 billion, which is £3.3 billion higher than the same period last year. With income tax allowances & thresholds remaining frozen until 2028, this figure is only likely to continue to rise throughout this tax year and beyond. Although on the face of it the government has cut national insurance, wage growth will have caused many more people to pay the higher rate of income tax on their earnings.
"Similarly, following the revelation last month that last year there was a record breaking £7.5bn paid in inheritance tax, the latest figures reveal that there has once again been a £85 million increase in IHT receipts to £0.7bn in April compared to last year as frozen thresholds and inheritance tax policy inertia persist. As we enter into election season, it would be sensible for either party to reassess the UK’s IHT landscape and change what is no longer fit for purpose.
"When the party manifestos are published later this year, we will see how both parties hope to evolve the inheritance tax system that has been in a state of paralysis for too long leading to these types of figures.
"Some of the measures that could help to alleviate the tax burden could be to drop the IHT tax rate to 30%. But such a tax cut is unlikely to be too much of a vote winner given that only a very small percentage of the UK public actually pay IHT.
"However, there are opportunities to improve the inheritance tax system more generally which would iron out some of the complexities and the inequalities. One area ripe for reform is the Residence Nil Rate Band (RNRB). While a well-meaning policy it is fiendishly complicated and excludes a significant demographic, especially the growing number of elderly individuals without children.
"With an aging population and increasing childlessness the RNRB’s exclusionary nature becomes ever more problematic. A fairer and less complicated system would be to raise the nil rate band to £500,000. This would be better aligned with the changing demographics and social structures of the country.
"Similarly, increasing the annual gifting allowance from £3,000 would help to improve the intergenerational wealth inequality as more people would be incentivised to gift larger sums of money during their lifetime. The gifting allowance has been stuck in time for decades and needs to be looked at as a matter of urgency."
For more information, please contact Alex Berry on + 44 (0)7741151931
