Inheritance Tax receipts are rising strongly together with various different tax revenues, producing a mini-windfall for the federal government.
IHT receipts for April and Could, the primary two months of the brand new tax yr, have been £1.4bn, up £200m on the identical interval final yr, newest figures present.
Evaluation by platform Nucleus has additionally revealed that HMRC tax receipts general for April to Could have been £132.8bn, £3.6bn larger than final yr.
The corporate says receipts have been larger from Earnings Tax, Capital Features Tax and Nationwide Insurance coverage Contributions (NICs), enterprise taxes and stamp taxes. Receipts have been decrease from VAT and gas obligation.
Andrew Tully, technical companies director at Nucleus, stated: “These figures proceed the sturdy upward trajectory in IHT receipts over the previous few years. The present £325,000 nil fee band has been at that degree since 2009. The residential nil fee band was launched on a phased foundation between 2017 and 2020 and doubtlessly provides a further £175,000 nil fee band (making a complete of £500,000) topic to sure guidelines. Each are presently supposed to be frozen till 2028.
“Given all of this, the necessity for professional Monetary Planning stays essential. Advisers may help handle an property by establishing trusts, making use of present allowances, and utilizing a pension to move on wealth to household in a tax environment friendly approach.”
Wealth Membership, an funding service for HNW traders, stated the IHT figures continued the upward development during the last 20 years.
It forecast that after bringing in £7.499bn in 2023/24 this determine may rise if the Labour Celebration wins the election as various tax mitigation methods to keep away from IHT, comparable to non-doms from utilizing offshore trusts, could possibly be closed. Closure of offshore trusts to non-doms may usher in £430m a yr, it stated.
Nicholas Hyett, funding supervisor at Wealth Membership, stated: “Inheritance tax is a scorching matter this election. Labour are concentrating on non-doms who shelter their cash overseas and the Conservatives have accused Labour of harbouring secret plans to go additional – with inheritance tax notably absent from the record of taxes within the Labour manifesto that won’t be elevated.
“The truth is that inheritance tax would possible rise below both of the 2 major events. Freezes on thresholds over the previous few years, partnered with a long time of home worth rises, have introduced increasingly more estates into the tax band.”
Retirement specialist Simply Group pointed that IHT raised £701m in Could, a rise of £92 million on the identical month final yr (£609m). It cited an OBR prediction that IHT receipts will proceed to rise and will hit £9.7bn a yr by 2028/29.
Stephen Lowe, group communications director Simply Group, “Final yr set a file for inheritance tax receipts with £7.5 billion collected in whole and this yr is off to a racing begin with over £1.4 billion collected over the primary two months.
“The OBR’s forecast paints IHT as an more and more profitable supply of revenue for the federal government with its newest revision anticipating receipts to rise to an estimated £9.7bn by 2028/29, pushed by a mixture of frozen thresholds and home worth development tipping extra estates over the edge.”
Consultants Broadstone stated many tax takes have been rising with a file £8.1bn of Insurance coverage Premium Tax (IPT) collections final yr. The primary two months of the brand new tax yr have seen £2bn of IPT receipts, an additional £228m in comparison with £1.8bn the earlier yr.
Cara Spinks, head of insurance coverage consulting at Broadstone, stated: “Demand for personal healthcare insurance coverage merchandise, like PMI and well being money plans, has soared following the rise in NHS ready lists during the last three years, with many individuals ready over 18 weeks for therapy.
“Price stays a big challenge, with healthcare prices persevering with to drive up premiums throughout the insurance coverage market. It implies that IPT is a profitable supply of tax income for the Treasury, with the speed of IPT greater than doubling from 5% in 2011 to its present fee of 12%.”
Funding platform Hargreaves Lansdown stated revenue tax take had additionally soared as frozen tax thresholds “proceed to chew.” It stated PAYE Earnings Tax and NIC1 receipts for April to Could 2024 have been £77.2bn, £2.8bn larger than the identical interval final yr. It identified that below each Labour and the Conservatives tax thresholds can be stay frozen ought to both win the election.
Sarah Coles, head of private finance, Hargreaves Lansdown, stated: “The revenue tax take has soared because of frozen tax thresholds. In Could we paid £19.6bn, in comparison with Could 2021 at simply £15.26 billion.
“For individuals who have been pushed into the upper fee tax bracket, this doesn’t simply imply paying a better fee of tax in your financial savings, it additionally means your private financial savings allowance has halved in a single day to £500, so that you pay this larger fee on extra of your financial savings too. It’s why money ISAs are again on the radar for thus many savers as a result of they’ll shield financial savings from tax.”
