Inheritance tax receipts reached £2.4 billion between April and July this year, up £0.3 billion on the same period of last year, official figures from HM Revenue & Customs showed.
Receipts reached a record high in June 2022 as a result of the small number of higher-value payments than usual, the treasury said.
Rising property prices and frozen tax thresholds were cited as key drivers behind the growing number of people being caught by inheritance tax, experts said.
Shaun Moore, tax and financial planning expert at Quilter, said: “The data shows that the inheritance tax take continues to rise and is proving to be more and more lucrative for the Treasury. Month on month increases have been a mainstay of this data set for a while showing the government is continuing to gradually increase tax revenues without significantly increasing the burden on taxpayers.
“Part of the reason for this is that property prices have increased so much that more and more are getting caught by the IHT net because the Nil Rate Bank and the Residence Nil Rate Band will remain frozen until 2026. Although house price data shows that a long awaited slowdown in property prices might be on the cards in the near future, due to a lack of housing stock in the UK property prices may remain high simply because of the laws of supply and demand.”
With IHT receipts on the rise, there will be a growing need for clients to access IHT planning advice, according to Stephen Lowe, group communications director at Just Group.
Lowe commented: “After a record-breaking opening quarter to 2022/23, frozen tax thresholds and property price increases continue to deliver bumper inheritance tax receipts for the Treasury compared with previous years. As more estates trip into the Inheritance Tax threshold, it becomes increasingly important for people to assess the full value of their entire estate and seek help on how the tax rules apply to them.
“For some people, options such as lifetime mortgages can unlock a portion of the wealth tied up in bricks and mortar. Passing on this wealth through ‘living inheritances’ allows people to see the benefit for recipients and it can also help minimise the inheritance tax payable on their estates. Professional, regulated advice can provide invaluable help for people in working out how to manage their finances in later life, including how the value tied up in their property may impact their estate planning.”
Andrew Tully, technical director at Canada Life, added: “This is a tax that is no longer just affecting the very wealthy in society and is increasingly catching out families who are unprepared or simply unaware.
“The legacy from the pandemic may mean more people are open to discussing estate planning with family. Good planning can help to reduce or mitigate IHT so it’s essential to get expert financial advice for tax efficient ways to pass wealth onto loved ones.”
