"While this is decent uplift for the Chancellor, it is really small beer when compared to other forms of tax"
Inheritance tax receipts have risen by 35% over the past year after the government froze the nil rate bank in this year's Budget.
The figures from HMRC show that the government collected £2.7bn in inheritance tax between April and August, which is £0.7bn (35%) more than for the same period a year earlier.
Shaun Moore, tax and financial planning expert at Quilter, commented: “Figures released today show inheritance tax receipts are becoming more profitable for the Treasury at a time when the Chancellor needs additional funds to pay for the pandemic’s economic support schemes.
“In March, Rishi Sunak announced that both the nil rate band and residence nil rate would remain frozen at existing levels until April 2026, at £325,000 and £175,000 respectively, meaning many families are already receiving increased IHT bills due to rising property and share prices.
“The best way to beat the big IHT freeze on allowances is to consider intergenerational wealth planning options such as making regular gifts; investing tax-efficiently or considering the use of trust planning, all of which a professional financial planner can help with to potentially eliminate any tax bill.
“While this is decent uplift for the Chancellor, it is really small beer when compared to other forms of tax, which is why the Chancellor may well be looking elsewhere to raise some serious cash in his budget come the autumn.”
Paul Archer, wealth planner at Kingswood, added: “The latest HMRC inheritance tax data shows that receipts for April 2021 to August 2021 are £0.7 billion higher than in the same period last year, reaching £2.7 billion. The main reasons for the rise in IHT receipts are threefold. First, the nil rate band of £325,000 - the asset amount an individual has free before they are charged IHT at 40% - has not risen since 2009. Second, estate values have risen in the last year mainly due to strong investment returns and property value rises. Third, the majority of wealth in the UK is owned by over 60s which is the age bracket where sadly Covid has resulted in more deaths than usual. Indeed for these reasons, we expect to see IHT receipts rising steadily this year and into 2022.”