Inheritance tax receipts hit £1.4 billion in April and May 2024, up £0.2 billion on the same period of last year.
A combination of frozen thresholds, rising property prices and inheritance tax policy failing to keep pace with inflation has resulted in the higher figures, with the tax haul expected to continue to increase. The Office for Budget Responsibility has predicted that IHT receipts will reach £9.7 billion a year by 2028/29.
Despite this, the three leading political parties, Conservatives, Labour and the Liberal Democrats, have shied away from discussing inheritance tax as they seek to win votes ahead of next month’s general election.
Rosie Hooper, chartered financial planner at Quilter Cheviot, said: “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.”
Stephen Lowe, group communications director at Just Group, said: “The General Election is less than two weeks away and despite IHT being a hot topic of debate leading up to the election campaign, there is a distinct lack of policy commitments in some of the key manifestos.”
Despite growing speculation over the past year that the Conservatives could look to slash or even abolish IHT, the subject was excluded from the party’s recent manifesto. Labour also refrained from delving into the subject, apart from its pledge to end the use of offshore trusts to avoid IHT.
Lowe said: “Particular attention will be paid to Labour’s policy position given the odds on them winning an outright majority and the commitment only to avoid tax rises on working people may hint that inheritance tax could still be on their list of revenue raising options if needed.”
In contrast, Reform was the only party to stick its head above the parapet in pledging to abolish IHT for estates worth under £2 million.
Laura Hayward, tax planner at Evelyn Partners, said: “IHT has turned into a spectre at the electoral feast which no one really wants to mention by name, never mind grapple with.
“Even if a new Government is shy of making transparent and potentially unpopular decisions to tax the passing on of wealth more harshly, then fiscal drag is doing a similar job behind the scenes anyway. With both property and financial market assets continuing to surge in value, there is no prospect of the trend abating for more estates and more assets in each liable estate being dragged over the frozen thresholds at which IHT kicks in.”
