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Treasury rakes in £6.8bn of IHT in 11 months

£400m higher than previous year 

Tax reduction and deduction for businesses and individuals. Concept with hand turning knob to low taxation rate. Return form, exemptions, incentives.


HMRC has revealed the Treasury raked in £6.8bn in inheritance tax (IHT) receipts in the 11 months from April 2023 to February 2024.

This represents a £400m jump on the figured recorded for the same period a year earlier. It continues a broad upward trend that shows no sign of ending unless the rules are changed.

According to Wealth Club, a big factor driving the rising tax take is house price increases, especially in London and the South East. Many families that probably would not consider themselves wealthy have been hit by the tax owing to this. 

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Wealth Club’s calculations suggest the average bill could increase to £240,000 this 2023/24 tax year, with over 31,000 families having to hand over part of their inheritance.

This would be a 12% jump from the £214,000 average paid just three years ago, and a 15% rise in the number of estates paying the tax. 

Nicholas Hyett, investment manager at Wealth Club, said: “One in every 25 estates pays inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases, is bringing more and more into the taxman’s sights. 

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“No one likes to pay more tax than they need to, and inheritance tax is among the least popular of all taxes. But with a little planning, there are a number of perfectly legitimate ways to reduce your liability – including some that should be front of mind as we approach the end of the tax year.”

Hyett noted gifting the full £3,000 allowance each year is one step to take. There are also strategies involving investing in AIM shares that can be used to reduce liability, as well as Enterprise Investment Schemes (EIS). 

John Glencross, CEO and co-founder of Calculus, said: “IHT receipts are on a continuous upward trend, driven by the prolonged freeze on IHT thresholds until at least April 2028. The Spring Budget surprisingly failed to address IHT which could have significantly influenced the strategies and approaches employed by intermediaries when discussing estate planning with clients.

“One current IHT mitigation approach for advisers and investors to consider is an EIS fund. The EIS provides inheritance tax relief, contingent on holding the shares for a minimum of two years and at the time of death.”

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