Inheritance tax receipts grow to £597 million in April amid frozen thresholds
HMRC took in £597 million through inheritance tax receipts in April, £90 million more than this time last year, as frozen thresholds mean the tax continues to catch a bigger portion of estates.
Wealth managers said the increasing number of estates subject to inheritance tax has meant many individuals are turning to gifting or donating to avoid having to pay the tax.
The tax-free allowance on inheritances has been stuck at £325,000 since 2009, and is set to stay there until 2028. During the time since the last change, the average house price has grown by 85%, meaning more estates now exceed the threshold and are subject to the tax.
Alex Davies, CEO and founder of investment manager Wealth Club, said a cut to the 40% tax rate or a change to the thresholds “would be very welcome by the large numbers of affluent, but far from uber rich, households that are being hit by this most hated of taxes”.
Dean Moore, managing director and head of wealth planning at RBC Wealth Management, said wealthy individuals were increasingly attempting to find ways to pass on their property and other assets without having to pay the tax.
“The current state of IHT places a substantial financial strain on the loved ones left behind after a person’s passing,” he said. “In response, individuals are increasingly resorting to measures such as gifting, investing, donating, and insuring their money to minimise or avoid this tax.”
Paul Barham, partner at Mazars, said: “The latest figures are a timely reminder to pay these steps some attention.”
London-based family law specialists Wildcat Law also revealed today that the number of estate disputes had rocketed, as it received more enquires about inheritance disputes in April than it did in all of 2022.