The total amount of inheritance tax raised between April and August of this year was £0.3bn higher than in the same period last year, HM Revenue and Customs has revealed.
HMRC explained that it had received £3.2bn in inheritance tax over Q2 2023, an increase on the £2.9bn that was reported last year.
Canada Life tax and estate planning specialist, Julia Peake, stated these figures point to 2023 being a “record-breaking year in IHT receipts for HM Treasury”.
HMRC additionally reported that receipts in June 2023 were the highest monthly total on record.
This record-high month was attributed to possible effects from the recent rise in interest rates.
HMRC stated that recent interest rises may have encouraged the personal representatives of some estates to pay tax sooner than they otherwise would have done.
However, HMRC stated that it is not able to confirm this until full administrative information becomes available.
Political ramifications
The political implications of HMRC’s findings was discussed by Quilter tax and financial planning expert, Rachael Griffin, who said: “This increasing revenue causes a policy conundrum for the government.”
She explained that this may be a particularly pressing issue as election season draws nearer and more Tory backbenchers call for inheritance tax reform or its abolition as a “vote-winning tactic”.
“While it would likely be a crowd pleaser, the government might be less keen given the ever-increasing revenue it is seeing from the tax,” she explained.
Evelyn Partners tax partner, Laura Hayward, added: “Rising IHT receipts are continuing to prove extremely lucrative for the Treasury and this doesn’t look set to change anytime soon.”
The reported increase in IHT receipts contributed to HMRC reporting an increase in its total receipts for Q2 2023, with £331.1bn being raised over the three month period.
This represented a £19.8bn increase on the same period in 2022.
Additional receipts
HMRC also reported its receipts for income tax, capital gains tax and national insurance contributions reached £185.8bn over Q2 2023.
This was an increase of £10.6bn on the same period in 2022.
Griffin stated: “Given the threshold for the additional rate of income tax has reduced from £150,000 to £125,140, we can expect further rises in coming months.”
An increase was also reported for PAYE income tax and NIC1 receipts for Q2 2023, rising from £161.2bn in 2022 to £170.7bn.
Additionally, environmental taxes, including landfill tax, aggregate levy, and climate change levy, totalled £1.5bn from April to August.
This is £90mn less than the same period a year earlier.
HMRC stated that these lower receipts can be attributed to timing effects which partially offset the higher receipts that were seen in July.
tom.dunstan@ft.com
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