Inheritance tax receipts surge 16.6% as manifestos barely mention transfer of wealth

HM Revenue and Customs today revealed that inheritance tax receipts for April 2024 to May 2024 are £1.4 billion, which is £0.2 billion higher than the same period last year. That is an annual increase of 16.6 per cent.

Laura Hayward, Tax Partner at professional services and wealth management firm Evelyn Partners, says:  
  
“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. The 16.6 per cent surge suggests that the next Government will be taking significantly more from IHT whatever it intends to do with the tax or the reliefs around it. 
 
“IHT has turned into a spectre at the electoral feast which no one really wants to mention by name, never mind grapple with. Labour named it once in their manifesto, confirming its pledge to end the use of offshore trusts, which is a matter affecting mainly non-doms. 
 
“While the Conservatives promised to retain business-related reliefs, they made no other pledge on IHT, with not one mention of the word ‘inheritance’ in their manifesto – quite a climbdown from the situation less than a year ago when the possible abolition of IHT was being touted for the 2023 Autumn Statement.  
 
“Rishi Sunak’s farmyard offensive this week played on fears that remain among agricultural and other family businesses that Labour could target these reliefs, given previous pronouncements. He claimed Labour had a ‘secret plan’ to increase taxes on farmers because it had not explicitly ruled out abolishing an exemption from IHT for agricultural properties. 
 
“Even if a new Government is shy of making transparent and potentially unpopular decisions to tax the passing on of wealth more harshly, then fiscal drag is doing a similar job behind the scenes anyway. With both property and financial market assets continuing to surge in value, there is no prospect of the trend abating for more estates, and more assets in each liable estate, being 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).[1] 
  
“The haul for the Treasury from IHT 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 £2.6trillion of equity tied up in their homes.”[2] 
  
[1] IFS March 2024 
[2] Savills:  
https://www.savills.co.uk/insight-and-opinion/savills-news/346692-0/housing-wealth-held-by-over-65s-hits-record-high-of-over-%C2%A32.6-trillion--according-to-research-by-savills  
Also, Knight Frank:  
https://www.knightfrank.com/research/article/2024-02-28-how-will-millennials-spend-us90-trillion 
  
ENDS 
  
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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