Explore the latest UK inheritance tax receipts, revealing a surge in figures for 2023. Discover the impact of frozen thresholds, property market dynamics, and growing awareness of inheritance tax. Stay informed about the evolving tax landscape.
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The United Kingdom has witnessed a continuous surge in its inheritance tax bill, as revealed by the latest figures published today. In June of this year, the country experienced its highest monthly total of inheritance tax receipts ever recorded.
Between April and July 2023, inheritance tax receipts reached a staggering £2.6 billion, marking a £0.2 billion increase compared to the same period in the previous year. Despite not being the largest tax payment for most individuals, inheritance tax remains deeply unpopular. A survey conducted by Hargreaves Lansdown in 2021 found that one in four people considered it their “most despised” tax.
Helen Morrissey, who serves as the Head of Retirement Analysis at Hargreaves Lansdown, commented on the situation. She pointed out that even though a relatively small number of people actually pay inheritance tax, frozen thresholds over the years have led to its growing impact. Morrissey mentioned that without any imminent adjustments to these thresholds, the trend of increasing receipts is likely to continue, affecting more families.
The record-high receipts in June are attributed to a select few high-value payments. This surge in receipts can be attributed to both these high-value payments and the potential influence of rising interest rates on penalties for overdue tax payments.
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The considerable growth in property prices witnessed in recent times has significantly contributed to higher inheritance tax bills for individuals. However, the current cost of living crisis has led to a cooling effect on the housing market. This has translated into price reductions and decreased market activity.
Daniel Tomassen, a Senior Manager in the Private Client Department at HW Fisher, noted that the figures released today indicate that HMRC (Her Majesty’s Revenue and Customs) is on track for a record-breaking year in terms of inheritance tax receipts. Tomassen explained that this situation is primarily due to the decision of the Chancellor to freeze the inheritance tax nil rate band until 2028. This lack of adjustment to the threshold, despite inflation, has resulted in a growing number of families being caught in the inheritance tax trap.
Tomassen emphasized the importance of careful planning and the utilization of available reliefs to ensure that individuals can leave as much as possible for their loved ones. He also cautioned about the increased cost of mistakes or late tax payments, as the late payment interest rate has risen to 7.75 percent. This highlights the urgency for individuals to be well-informed about their tax obligations to HMRC and to make timely payments.
In summary, the UK’s inheritance tax receipts have reached new heights, largely due to high-value payments and the impact of rising interest rates on penalties. The freeze on inheritance tax thresholds has resulted in more families being affected by this tax. The property market, previously a key contributor, has seen a downturn due to the cost of living crisis. Careful planning and timely payments are essential to navigate this tax landscape successfully.
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