Inheritance tax receipts increase by 54% year-on-year in April and May
Inheritance tax (IHT) receipts rose by 54% in April and May 2021 in comparison to the same two-month period in 2020, according to a bulletin recently released by HMRC.
Receipts for April 2021 to May 2021 totalled £966 million. This is an increase of £340 million on the same period last year.
The data also highlighted full-year IHT receipts of £5,326 million for 2020-2021, a £204 million increase from the year before. In addition, total HMRC receipts for April 2021 to May 2021 were revealed to be £106.8 billion, over £45 billion higher than the same period in 2020.
What has caused an increase in inheritance tax receipts?
In their recent bulletin, HMRC indicated that the significant increase in year-on-year IHT receipts is “expected to be due to higher volumes of wealth transfers that took place during the COVID-19 pandemic”.
However, HMRC cannot verify this until full administrative data becomes available.
In the 2021 Spring budget, Chancellor of the Exchequer Rishi Sunak introduced freezes on both IHT and capital gains tax (CGT) until 2026. This means that the nil-rate band (NRB) remained at £325,000 as did the residence nil-rate band (RNRB) at £175,000.
Despite some initial optimism, this has been referred to as a ‘stealth tax’ by many observers that will cause IHT bills to continue to rise as the value of property and overall wealth increases.
In addition, there is growing concern that both IHT and CGT could yet be increased as the Government explores different avenues to recover from debt incurred by the pandemic.
If you would like to find out more about mitigating IHT liabilities for your clients, click here to explore our wide range of Inheritance Tax Services.
Written by Jack Dobinson
Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Prospective investors should ensure that they read the brochure and fully understand the risk factors before making any investment decision. The value of investments and the income from them may fall as well as rise and is not guaranteed. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of potential future results are not a reliable indicator of actual future results.
Stellar Asset Management Limited of Kendal House, 1 Conduit Street, London W1S 2XA is authorised and regulated by the Financial Conduct Authority.