Inheritance tax (IHT) liabilities rose by £330 million year-on-year to £7.03 billion in 2023/24, an increase of 5% from £6.70 billion in 2022/23. The average IHT bill also increased, climbing from £212,000 to £231,000 per taxable estate.
While the number of estates paying IHT fell from 31,500 to 30,400, a reduction of 3.6%, the proportion of UK deaths resulting in an IHT charge edged up to 4.72%, compared with 4.62% a year earlier. This was largely because the total number of deaths declined more significantly over the same period.
HMRC says the increase in tax receipts reflects a combination of higher asset values, wealth passing on death and the continued freeze on inheritance tax thresholds.
Commenting on the figures, Claire Trott said that although IHT continues to affect a relatively small proportion of estates, both the number of estates caught by the tax and the overall amount collected are continuing to rise. She noted that frozen thresholds, combined with increasing property and asset values, mean more families could become liable for IHT over time.
The standard nil-rate band has remained at £325,000 since 2009, while the residence nil-rate band has been fixed at £175,000 since the 2020/21 tax year.
Looking ahead, the Office for Budget Responsibility forecasts that annual inheritance tax receipts will increase to £13.7 billion by 2029/30, rising to £14.7 billion the following year.