IHT, levied at 40%, brought in £6.3bn in the nine months to the end of December. That’s an 11% increase on the £5.7bn received in the same period in 2023.
Experts said the number of estates hit by the tax is growing all the time, thanks to frozen nil-rate bands beneath which the tax is not due and growing inflation.
Nicholas Hyett, investment manager at investment expert Wealth Club, said: “Inheritance tax continues to be something of a golden goose for HMRC – with a tax take that seems to rise inexorably. It may only affect a small number of estates at present, but that number is growing all the time – suggesting ‘Britain’s most hated tax’ is only set to become more unpopular.”
Pensions raid will push uptake
Rachel Reeves’ plan to bring pension pots – which are currently outside someone’s estate for tax purposes – into scope for IHT will only push up IHT receipts for the Government.
Fraser Kerr, head of financial consultants at Abrdn Financial Planning, said the technical consultation on this, which closes today (Wednesday 22 January), brings the new rules on pensions a step closer.
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“It’s more important than ever for people to understand how changes to IHT rules might affect them and take steps to mitigate this,” he said.
IHT-proofing your family
Kerr suggests exploring strategies like gifting money to family members, setting up trusts, and insurance, all of which could help reduce your liability.
Helen Morrissey, head of retirement analysis at DIY investment platform Hargreaves Lansdown, also suggests making gifts.
She said: “You can give £3,000 within your annual allowance, regular gifts from surplus income, or start the clock ticking on a potentially exempt transfer, which falls out of your estate after seven years.”
However, she cautions that you must balance giving away money with leaving yourself sufficient funds.
“It’s vital not to give away too much too soon as it could leave you struggling later on,” she added.
Capital gains take also soars
As well as increased IHT take, the tax receipt figures showed we paid more capital gains tax (CGT) in the last nine months than in the same period the year before.
From April to December 2024, total CGT receipts stood at £1.85bn, up from £1.44bn during the same period in 2023.
The change is partly due to the uncertainty surrounding the Budget, which led to more people liquidating assets ahead of expected changes.
Shaun Moore, tax and financial planning expert at Quilter, said there was action people could take on this tax as well to save their family money, particularly taking advantage of the £3,000 exempt amount each year that they can make without paying tax.
“With the Annual Exempt Amount shrinking to just £3,000 and rates rising, the room for manoeuvre is tightening. For those with significant assets, timing has become everything,” he said.
