Rosie Hooper, chartered financial planner at Quilter Cheviot, stated that the latest HMRC tax receipts show a “significant increase” in inheritance tax (IHT), PAYE income tax, and national insurance payments for May to June 2024. She added:
“Inheritance tax receipts have risen to £2.1 billion, which is £83 million higher than the same period last year. This increase continues the strong upward trend in IHT receipts over recent years.
Frozen tax thresholds, which show no signs of thawing under Labour, have not kept pace with inflation, leading to a continuous rise in IHT collections. The current £325,000 nil-rate band has remained unchanged since 2009. The residence nil-rate band, introduced gradually between 2017 and 2020, potentially adds an extra £175,000 nil-rate band, totaling £500,000, subject to certain rules. Both thresholds are expected to remain frozen until 2028.
The Office for Budget Responsibility predicts that by 2028-29, the proportion of deaths resulting in the payment of inheritance tax will rise to 6.3% – its highest level since the 1970s, having fluctuated between 2% and 6% for the past forty years. Given these projections, the need for expert financial planning remains crucial. Financial planners can help manage an estate by setting up trusts, utilizing gift allowances, and using pensions to pass on wealth to family members in a tax-efficient manner.”
