Receipts for inheritance tax (IHT) received by HMRC between April and October 2021 totalled £3.6bn, new figures have revealed.

The total is £0.6bn higher than in the same period last year.

According to HMRC, the higher receipts it received in October and November 2020, and from March to August 2021, are expected to be due to higher volumes of wealth transfers that took place during the pandemic. However, HMRC cannot verify this until full administrative data becomes available.

Lower IHT receipts were received in April and May 2020 due to a temporary issue where HMRC was unable to accept cheques for payment of IHT due to COVID-19. This was resolved, however, leading to a peak in June 2020 receipts.

Commenting on the latest data, partner at Deepbridge Capital, Andrew Aldridge, said: “Today’s HRMC data shows a £0.6bn higher uptake in receipts for IHT than in the same period a year earlier. It shows how easy it is for individuals and couples to generate a potentially large IHT bill when they die, despite not being what they may perceive as ‘wealthy’.

“Despite a majority of financial advisers telling us that IHT is a primary financial planning consideration, these latest figures clearly show that many individuals are still not seeking the advice which can make it possible to pass on more of their wealth to their family.”

Quilter tax and financial planning expert, Shaun Moore, added that a factor that is likely to be contributing to the increase in IHT receipts is a “soaring housing market”.

“Despite the stamp duty holiday drawing to a close at the end of September, the race for space continues and this week’s ONS data showed a record high average UK house price of £270,000,” he said. “With IHT thresholds frozen, which is viewed as a stealth tax rise, more people will be facing IHT bills following the sales of their homes.

“This tax year, you can pass on £175,000 of your property tax-free, which is effectively doubled to £350,000 when combined with the allowance of your spouse or civil partner. That’s layered on top of your inheritance tax allowance – or nil rate band – of £325,000, meaning it is possible to pass on £1m inheritance free as a couple.”

Moore also highlighted other ways to reduce IHT exposure, including gifting to family members.

“Each tax year you can give away up to £3,000 worth of gifts with your annual exemption, so as a couple you could gift £6,000 a year,” he added.

“In addition, there is no limit on excess income – above expenditure - that can be gifted. Unfortunately, gifting allowances have failed to keep up with inflation, and the currently soaring inflation rates will do little to help matters in terms of IHT bills.”

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