Figures out today show that HMRC raked in another £2.4 billion in inheritance tax receipts in the three months to July 2022. This is £300 million more than in the same period last year.
Liz Truss and Rishi Sunak have both suggested they would review inheritance tax rules as Prime Minister. This could mean scrapping this most hated of taxes altogether, cutting the 40% rate, increasing the threshold which has been frozen since 2010 at £325,000, or making more assets exempt, such as ISAs. Alternatively they could introduce an American-style estate tax, which in its simplest form is effectively a cap on the amount that anyone can give away in their lifetime and each year, tax free.
Alex Davies, CEO and Founder of Wealth Club said: “Inheritance tax reform is a potential vote winner for Rishi Sunak and Liz Truss among Conservative party members, but it’s hard to imagine it will be top of their agenda in any emergency Budget once they step into power. Cutting inheritance tax will do nothing to ease the cost of living crisis engulfing the country, and it’s a real cash cow for the Treasury too. IHT generates around £800 million in tax revenue each month, a very meaningful sum at a time when 29 million households are being given £400 each to offset energy bills.
The increase in the monthly IHT take is being driven by soaring house prices and years of frozen allowances. With rampant inflation, the effect of freezing allowances will only increase in the years ahead unless the new Prime Minister chooses to intervene. While just 4% of estates pay inheritance tax at the moment, without some review of the rules, more and more families are going to find themselves hit by death duties they might not have expected.”
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Inheritance Tax Receipts £2.4BN in three months to July, up £300M on same period year earlier