The amount being paid in Inheritance Tax is on course to set records for a third consecutive year while Stamp Duty falls once again, according to new data from HMRC.
The figures revealed that Inheritance Tax receipts for the period between April and December reached £5.7bn. That’s £400m million higher than the same period in the year before, an eight per cent jump.
Stephen Lowe, group communications director at Just Group, said that the Treasury would be able to bank on record breaking Inheritance Tax receipts for a third straight year.
He noted that at the current rates, Inheritance Tax was on course to bring in around £7.6bn for the Treasury in this financial year, substantially up on the expected revenues of £7.2bn.
He continued: “It’s a useful source of revenue for the government but we may see the Chancellor prioritise political expediency in the coming Spring Budget as we rapidly approach the next General Election.
“Only a small proportion of households are impacted by Inheritance Tax, but the tax bites deep on those estates affected. Our research suggests there is a low level of understanding around the Inheritance Tax rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge.”
Inheritance tax up but stamp duty falls
Overall stamp taxes for the period of April 2023 to December came to £11.7bn, the HMRC figures revealed. That’s down by £4bn on the same period last year.
Further analysis from Coventry Building Society found that just on stamp duty land tax, homebuyers shelled out £11.8bn across the whole of 2023, down by a whopping 26.7% on the £16.2bn paid in the previous 12 months.
The mutual pointed to the impact of fewer people opting to buy homes last year, in part due to the higher mortgage interest rates in effect. It noted that up to the end of November there had been more than 225,000 fewer transactions compared with the same period in 2022.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said that stamp duty was “ripe for change”, criticising the attitude of successive governments towards utilising “temporary measures” rather than more permanent amendments to the levy.
He continued: “Applying any short-term thinking won’t build long-term confidence and stability in the market. We all saw how the Stamp Duty holiday in 2020 and 2021 boosted the market, but the sudden spike in demand led to distortion and the after effects are arguably still lingering now.
“Now is the time for a thorough review of tax on property purchases, taking into consideration some of the issues facing buyers and sellers, which helps support the market in the long term.”
