An annual update published today by HMRC shows that IHT receipts for the 2021 to 2022 tax year were £6.1 billion – an increase of 14% (£729 million) on the financial year 2020 to 2021. This represents the largest single-year rise in IHT receipts since the 2015 to 2016 financial year.
Julia Rosenbloom, tax partner at Evelyn Partners, the leading integrated wealth management and professional services group created from the merger of Tilney and Smith & Williamson, comments:
“This bumper update to annual IHT tax receipts follows a succession of year-on-year increases of IHT receipts over the last 12 months. All eyes are now on the Conservative leadership campaign because whoever the membership vote and takes office as the next Prime Minister on September 5th will stamp their mark on personal taxation for the coming months and years. Liz Truss, currently the frontrunner in the polls amongst Conservative members, has promised to hold an emergency Budget if she wins and has pledged to scrap the rise to National Insurance and the planned increase in corporation tax. Meanwhile, Rishi Sunak has largely said he will hold off cutting taxes until inflation has been brought under control, although has pledged to scrap VAT on household energy bills for a year.
“Families should not, however, be under any illusions that any tax cuts introduced will translate into tax cuts across the board. While Truss has made specific pledges on the likes of National Insurance and corporation tax, the outlook for personal taxes such as IHT is far from certain. Many families are already continuing to face higher IHT bills given that the nil rate band and residence nil rate band has been frozen until at least April 2026. Rising property prices are pushing more families into scope for IHT. Given Truss’s pledges to cut taxes elsewhere, it would be brave of a new Prime Minister and Chancellor to cut IHT and thereby reduce the revenue it brings into the Treasury.
“With uncertainty surrounding personal taxation for the months and years ahead, the need for families to give adequate thought to tax planning and take professional advice is extremely important. By considering tax planning strategies such as making gifts to family members or investing tax-efficiently there are a number of legitimate ways families may be able to reduce or eliminate their IHT bills.”
