1 Aug 2014

HMRC's take from IHT grows

HMRC’s annual take on inheritance tax (IHT) continues to grow, according to a report by accountancy firm Saffery Champness

The report cites figures from HMRC’s IHT statistics, which show that the Revenue’s IHT intake is worth more than £3.4bn, representing an 8.6% increase on last year’s £3.1bn. This brings the total IHT paid to nearly the same as pre-recession levels.

The number of taxed estates also increased by 2.5%, rising from 15,584 to 15,976 – representing 3% of all deaths; the Office for Budget Responsibility (OBR) predicts that this will double in the next five years.

Lucy Brennan, a partner in Saffery Champness’ described IHT as a Revenue “cash cow” and said that taxpayers around the country would be relieved by a Conservative proposal to increase the threshold to £1m.

“IHT continues to be a cash cow for the Revenue, as both overall tax income and numbers of liable estates continue to rise,” Brennan said.

“The growth of overall IHT income also appears to be gaining steam, although it is notable that the rise in the number of estates having to pay IHT is growing at a far slower rate.”

She added that HMRC recognised that the economic recovery had fuelled house prices and helped to increase income, resulting in more gains from IHT.

Brennan said, “Despite commitments to maintain the IHT threshold freeze through 2018, the Conservatives appear to once again be breathing life into the idea of raising the threshold to £1 million.

“If that materialises, serious questions will no doubt emerge about the potential long-term impact on IHT-related income to HMRC.

“This will likely come as a welcome relief to taxpayers around the country, who continue to fall within the IHT’s grasp in increasing numbers and at increasing levels.”

HMRC was unavailable to comment, however a spokesperson from HM Treasury (HMT) said, “Tackling the deficit is a key part of the Government’s long-term economic plan.

“Couples can still leave £650,000 tax free but we have frozen the inheritance tax threshold to help pay for the capping of social care costs and end the scandal of people having to sell their homes to pay for social care – meaning they often had no home to leave to their children and grandchildren in the first place."

Oliver Griffin


Related articles

HMRC accused of back door inheritance tax rules 

Inheritance tax a touchy subject, says Gauke 

Clegg calls for Scotland to control own tax 

IHT freeze increases HMRC yield