£1.4bn Inheritance Tax Paid in Just 2 Months

HMRC has released inheritance tax (IHT) receipt figures for April and May 2024.  Total IHT receipts during this period was £1.4bn, this is £200m higher than the same period last year.

Without changes post General Election, HMRC looks set to smash the 2023/24 IHT record of £7.5bn and could be around £9bn in total for 2024/25 and over £10bn by 2027/28.

As many will now be aware, the Labour Party manifesto said they “will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”

No mention in the manifesto of capital gains tax or Inheritance Tax.

Pension funds being outside your estate and tax free on death before age 75 was perhaps never an intended consequence of pension simplification and flexible access drawdown and we all know that pension funds are now used heavility as an estate planning tool.  The Conservatives have already made a minor attack on this by introducing a Lump Sum Death Benefit Allowance (LSDBA) of £1,073,100 meaning that inherited pension funds that exceed the LSDBA before age 75 will be subject to the beneficiaries usually income tax rates when they drawdown.

Given that Labour has since been pressed into defining ‘working people’ as those with earned income and little or no savings, and Labour hinting that those with mainly unearned income from property, investments and shares should pay more tax, capital gains, dividends and inheritance are clearly the main ways they will raise additional revenue.