Inheritance tax receipts reached £3.5bn for April to August 2024, £0.3bn higher than the year before, data from HM Revenue and Customers revealed.
This is an increase from the previous month when receipts hit £2.8bn, as the tax continues its upward trajectory in the past few years.
Andrew Tully, technical services director at Nucleus, thought the latest figures may give the government “food for thought” ahead of the upcoming Budget.
He said: “Changes could be made such as scrapping or updating the rules on agricultural land and business relief. Currently, a person can claim up to 100 per cent relief on the inheritance of agricultural land if it is being actively farmed. This could be reduced, or certain limitations placed on the maximum value of the relief.
“There could be a tightening of qualifying criteria for business relief, perhaps relating to unlisted shares and AIM portfolios. Although that could be difficult to implement and may not tie in with the desire to increase investment in the UK.”
Shaun Moore, tax and financial planning expert at Quilter, felt today’s statistics would “no doubt” stoke the rumours about the tax being increased come October 30.
“As Labour navigates the complex issues surrounding IHT in the upcoming budget, there is a strong argument for simplifying the IHT system and making it more appealing to gift during one’s lifetime.
“The complexity of the current system often leads to confusion and inequities. A simpler system could help reduce the administrative burden for both taxpayers and HMRC, while also making it fairer. Similarly, increasing the gifting threshold would encourage earlier wealth transfer, reducing future IHT liabilities, and could boost consumer spending,” he added.
Alastair Black, head of savings policy at Abrdn thought a Budget tax raid could be "imminent" with rumours swirling about the chancellor potentially pulling pensions into the IHT net or potentially slashing gifting allowances.
“Any changes like this could have serious ripple effects, scaring off much-needed investment or throwing a wrench into the plans of people who’ve based their finances on today’s rules. So we will need to see potentially complex transitional reliefs too.
“Whatever the chancellor announces, one thing is certain: we need to see a simpler, fairer IHT system that cuts through the confusion and brings some much-needed clarity to a tax that’s spiralling out of control,” Black urged.
Elsewhere income tax, CGT and national insurance receipts for April 2024 to August reached £194.4bn, £5.4bn higher than the same period last year.
While PAYE income tax and national insurance receipts hit £179.7bn for April to August, £5.1bn higher than last year.
alina.khan@ft.com
