Darran Harrison comments on rising Inheritance Tax receipts
Wealth Planner at Kingswood, Darran Harrison, shares his thoughts on IHT receipts rising by £700 million.
According to Darran Harrison, Wealth Planner at Kingswood: “The latest figures published from HMRC today have revealed inheritance tax (IHT) receipts from April 2022 to December 2022 are £5.3 billion, which is £700 million higher than in the same period a year earlier.
A recent study found more estates pay inheritance tax in London and the South East and that property accounted for around 50% of the wealth in London estates paying IHT compared to 32% for the rest of the UK. Further still, the average house price in London is 71% higher than the rest of the UK which could be a contributing factor.
The increase also shows the effects of ‘fiscal drag’, where allowances and reliefs have not increased in line with rising prices. With inflation continuing to rise, this factor will play a big role in future tax revenues. The nil rate band and residence nil rate band are set to be frozen until at least April 2026, resulting in many families receiving increased IHT bills as more estates are brought into scope.
With the impact of freezing tax bands and allowances the Chancellor is increasing tax receipts without changing tax rates. The effect is magnified in periods of high inflation, resulting in the buying power of a family being significantly reduced over time.”
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