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£18bn surge in tax receipts ahead of Budget

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Ahead of today’s budget, Chancellor Philip Hammond received some good news with the tax receipts up by more than £18bn when compared to the same period last tax year.

The surge in receipts since April has been fuelled by significant increases in the amounts of inheritance tax (15.1%), corporation tax (16.4%), VAT (5.8%) and National Insurance contributions (4.8%).

In particular, the rise in IHT reflected a more aggressive approach by HMRC, with a record £5.5bn gathered from people’s estates this year. The jump in receipts has come in spite of the government’s new flagship inheritance tax policy, the Residence Nil Rate Band, introduced in April, which took some of the value of people’s homes out of the IHT net.

Sean McCann, chartered financial planner at NFU Mutual, said: “It’s clear that the taxman is cracking down hard on inheritance tax by looking more closely at people’s estates and challenging claims for reliefs.

“When inheritance tax receipts rise, it’s usually because of a buoyant housing market. Now, with property prices in many areas of the country stagnating, it’s difficult to see what could have caused such a sharp increase in receipts other than a more aggressive approach to inheritance tax. The extra scrutiny from tax officials means those who haven’t taken professional advice or planned early could be caught out.”

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