Inheritance tax receipts grow as 'great wealth transfer' gets underway

HM Revenue and Customs today revealed that Inheritance Tax receipts for April 2024 to June 2024 were £2.1billion, which is £83million higher than the same period last year. That is an annual increase of 4.1 per cent.

Laura Hayward, Tax Partner at professional services and wealth management firm Evelyn Partners, says:   
   
“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 £5.5trillion, the temptation for successive Governments will be to tap into it to plug gaps in the public finances.[1] 
  
“One think-tank economist has already urged the new Chancellor to consider bringing defined benefit pension pots into the remit of IHT, ahead of Rachel Reeves’ first big fiscal statement, expected in October.[2] The first Budget from a Labour Chancellor in 14 and a half years will be closely watched for any review into IHT reliefs, or suggestion that pension pots could be deemed part of a deceased’s estate. 
 
“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.  
  
“The Office for Budget Responsibility forecasts that the share of deaths resulting in the payment of inheritance tax will rise to 6.3 per cent by 2028–29, the highest level since the 1970s. That proportion was as low as 2.7 per cent in 2009/10. Revenue from inheritance tax and its predecessors has increased over time in real terms, from around £2billion in 1980/81, to £7.5billion in 2023/24, and will reach almost £9billion by 2028/29 (all amounts in 23/24 prices).[3]  
   
[1] Kings Court Trust 
[2] David Sturrock, IFS 
[3] OBR, April 2024

ENDS 
  
Disclaimer  
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication.  
Issued by the Evelyn Partners group of companies (the 'Group') which comprises Evelyn Partners Group Limited and any subsidiary of Evelyn Partners Group Limited from time to time.   
© Evelyn Partners Group Limited 2024   
   
About Evelyn Partners   
We are a wealth management and professional services group, created following the merger of Tilney and Smith & Williamson in 2020. With £61.8 billion of assets under management (as at 31 March 2024) we are one the largest UK wealth managers and are also the seventh largest UK accountancy firm ranked by fee income (source: Accountancy Age 50+50 rankings, 2023). Evelyn Partners was named Accountancy Firm of the Year in the 2023 City AM Business Awards.   
We have a network of offices across 29 towns and cities in the UK, as well as the Republic of Ireland and the Channel Islands. Through our operating companies, the Group offers an extensive range of financial and professional services to individuals, family trusts, professional intermediaries, charities and businesses.   
Our purpose is ‘to place the power of good advice into more hands’, and we are uniquely well-placed to support clients with both their personal financial affairs and their business interests. Our personal wealth management services include financial planning, investment management and advice, personal tax advice and, through Bestinvest, an award-winning online investment and coaching service for self-directed investors. For businesses, our wide range of services includes assurance and accounting, business tax advice, employee benefits, forensic advice, fund administration, fund governance, recovery and restructuring and transaction services.    
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