Inheritance tax (IHT) receipts have reached £2.1bn between April and June 2024, an increase of £83m on the same period last year.

HM Revenue and Customs (HMRC) said that the increase in receipts for the Treasury from March 2022 are expected to be from the combination of higher volumes of wealth transfers following recent IHT-liable deaths, recent rises in asset values and the Government’s March 2021 and Autumn 2022 decisions to maintain the IHT tax-free thresholds up to 2027 and 2028.

Furthermore, HMRC added that the higher receipts in June and November 2022, and June and October 2023, can be attributed to a small number of higher-value payments than usual.

The Office for Budget Responsibility (OBR) has predicted that IHT receipts will continue to rise and forecasts that the tax take will reach £9.7bn a year by 2028/29.

Tax partner at Evelyn Partners, Laura Hayward, said: "With the baby boomer generation now hitting their sixties and seventies, some of that generation’s accumulated wealth is being passed on to children and grandchildren, and getting taxed on the way. The ‘great wealth transfer’ is also underway because many of the older, weather generations are making lifetime gifts to their families. As the wave of inheritance is set to grow over the next 30 years to a transfer of £5.5trn, the temptation for successive Governments will be to tap into it to plug gaps in the public finances.

"The only reference to IHT in this year’s Labour manifesto concerned offshore trusts and non-doms, so it would raise eyebrows if the new Government made a move on IHT just months into their term. Back in March 2010, in the last Labour Budget, the late Alistair Darling said he was freezing the £325,000 IHT Nil Rate Band for another four years – a policy that remained in place under Tory-led Governments ever since, and which has helped the Treasury to tap into more family assets without any unpopular IHT crack-down.

"With both property and financial market assets continuing to surge in value, there is no prospect that this long-standing trend will abate: more estates, and more assets in each liable estate, will be dragged over the frozen thresholds at which IHT kicks in."

Despite the increases in IHT collection, some analysts have called on changes to the IHT system in order to make it fair.

Specialist financial adviser at Wesleyan Financial, Jonathan Halberda, stated: "In our view, Inheritance Tax is ripe for reform. It was designed as a tax for the very wealthiest, but it’s now affecting more people than it was ever originally intended to. We hope any changes address this, and make it easier for families to engage with.

"The good news is that there are steps you can take in the meantime to help manage your liabilities. This includes paying into a pension, gifting money to friends and family or putting some of your assets into a trust. All of this starts with good planning – if you haven’t considered how IHT could affect you and your plans to pass your assets to loved ones, take the time to do so now."

---