Tax year’s IHT intake totals £4.6bn up to December

Inheritance Tax (IHT) receipts for the period between April and December 2021 totalled £4.6bn, new HMRC figures have revealed.

This figure was £0.6bn higher compared to the same period in 2020.

According to HMRC’s figures, receipts from April stood at £3.6bn up to October, meaning a further £1bn was received in the final two months of 2021.

Before this period, the higher receipts that HMRC 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 said it cannot verify this until full administrative data becomes available.

Commenting on the latest data, Canada Life technical director, Andrew Tully, said: “IHT receipts for December 2021 were £474m down slightly from £500m the previous month.

“This slight decline could signal a slowdown in activity after the high volumes of wealth transfer seen during the height of the COVID-19 pandemic – receipts for April to December 2021 were 13% higher than April to December 2020.

“However, with the IHT bands frozen, and house prices continuing to increase, starting effective estate planning early is crucial to minimise any IHT due and make sure wealth is passed on to the people you want to receive it.”

Quilter tax and financial planning expert, Shaun Moore, added that with property prices continuing to rise, IHT payer’s bills will also keep rising in future amid the ongoing house price inflation.

However, he also warned: “There’s more bad news to come for families dealing with the death of a loved one, as probate fees are set to increase from tomorrow. It seems you can’t escape soaring prices, even in death, with fees going up by 27% for personal applications and 76% for those made through a professional. The rate is therefore equalised at £273 for both personal and professional applications.

“While a positive for the government that the fee now actually aligns to the cost of providing the service, the timing of the increase is very poor with inflation on the rise and the cost-of-living crisis threatening a financial nightmare for many over the winter.

“The only consolation is that previous proposals would have seen the fees increase by even more and would have been based around a banded structure. Not only would this have increased the cost for large estates, it would have introduced unnecessary complexity into the system.”

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