Inheritance tax receipts for April and May lifted 16.6% to £1.4bn, compared to the same period last year, according to official data.
Higher receipts are due to a mix of increasing volumes of wealth transfers following recent inheritance tax-liable deaths, rises in property values, and the maintenance of the levy’s thresholds at 2020 and 2021 levels, says HMRC.
Standard inheritance tax is levied at 40% on estates valued above £325,000. The tax comes under much criticism, but is usually paid by around 4% of UK estates.
In the current major party manifestos, Labour pledged to end the use of offshore trusts as a tax break against Inheritance tax, which mainly affects non-doms.
The Conservatives make no mention of the levy in its manifesto. However, in the run-up to the March Spring Budget it was widely briefed that this tax would be abolished.
Quilter Cheviot chartered financial planner Rosie Hooper says: “Frozen thresholds and inheritance tax policy has failed to keep up with inflation and therefore these figures will continue to increase.
“Sadly, neither Labour nor the Conservatives have committed to wholesale reform the UK’s inheritance tax landscape and change what is a creaking system badly in need of reform.
“Labour has in fact remained tight-lipped on potential future changes to inheritance tax and some reliefs might be on the chopping board if Labour wins.”
Evelyn Partners tax partner Laura Hayward adds: “Inheritance tax receipts seem to be booming in this tax year, and after just two months revenues are well on the way to a record total for the 2024/25 tax year.”
She points out that the Office for Budget Responsibility forecasts that the share of deaths resulting in the payment of inheritance tax will rise to 6.3% by 2028–29, the highest level since the 1970s.
Hayward adds: “The haul for the Treasury from inheritance tax is likely to escalate in the coming years due to a particular demographic bump.
“As the wealthy baby boomer generation dies off in the next couple of decades, there will be a massive transfer of wealth. Research shows that the older generations have as much as £2.6trn of equity tied up in their homes.”
