Inheritance tax receipts rocket to £5.7bn in eight months – earlier than Rachel Reeves’ raid even kicks in

Inheritance tax receipts hit £5.7billion in the eight months from April to November 2024, new data from HM Revenue & Customs has revealed. 

This is £600million higher than over the same eight months last year and continued the upward trajectory in receipts over the past two decades. 

While the year-on-year growth remained constant, inheritance tax receipts decreased on a monthly basis, following seasonal trends.  

In the last full tax year, inheritance tax raised around £7.5billion for the Treasury’s coffers. 

The upturn in inheritance tax receipts contributed to gross HMRC tax and National Insurance contribution receipts for April to November 2024 reaching £537.2billion, marking a £15billion increase on the same point a year ago. 

The increase was also driven by a rise in capital gains tax and National Insurance contributions, which reached £6.8billion, business taxes, which reached £2.9billion, and stamp taxes, which came in at £1.9billion. 

Boost for Chancellor Rachel Reeves: Inheritance tax receipts swelled to £5.7bn in an eight month period 

Just Group’s communications director, Stephen Lowe, said: ‘Inheritance tax is set for another record year with receipts already over £550million ahead of the total through the same period in 2023/24.’ 

At present, just one in 20 estates is liable for inheritance tax, but government estimates suggest that this will increase to one in ten estates by 2030.

A series of changes to inheritance tax rules announced in Rachel Reeves’ Budget are expected to raise £2billion a year, according to the Chancellor. 

The measures, announced in the Budget, include applying the tax to inherited agricultural assets worth more than £1million for the first time. The move has prompted anger among farmers.

On today’s latest inheritance tax receipts, Alastair Black, head of savings policy, at abrdn said: ‘Today’s figures confirm the consistent and significant uptick in IHT receipts since the start of the tax year. 

‘What’s more, annual receipts are now £0.6billion higher than this time last year and we expect this to accelerate even further in the months, and years, to come.

‘As we end the calendar year, many will turn their attention to preparing for April 2025, especially in light of the extended IHT threshold freeze and plans to bring pensions into the IHT sphere from April 2027. 

‘For those with specific concerns about inheritance tax, strategic financial planning will be critical in the months ahead.

‘Advisers are telling us they have seen an increase in demand for advice which could make the advice gap even wider, so the Financial Conduct Authority’s recent publication on Targeted Support is timely as an important step in the journey to address this.’

Shaun Moore, a tax and financial planning expert at Quilter, said: ‘Christmas has come early for the government, as this morning’s figures from HMRC reveal inheritance tax receipts for the period of April to November 2024 climbed to £5.7billion, an increase of £0.6billion compared to the same period last year.’

He added: ‘More and more people are being ensnared by inheritance tax, and this will only increase. With the IHT threshold frozen until 2030, coupled with pensions being added to the taxable estate from April 2027, the government’s coffers will get a substantial top-up in the coming years.

‘Farmers will also start to add to these figures as Agricultural Property Relief becomes less generous. 

‘This could result in farming families facing bigger inheritance tax bills, which could force difficult decisions about the future of their farms. Additionally, the government’s changes to reliefs for AIM shares and Business Relief are also expected to boost its revenue.’

Jonathan Halberda, specialist financial adviser at Wesleyan Financial Services, said: ‘Another month, another increase in the Government’s inheritance tax receipts.

‘This was entirely predictable given that the £325,000 threshold has been frozen until 2030, which will inevitably drag more estates into the IHT net.

‘The new year will also bring some extra clarity on the exemption that means pension funds can be passed on to beneficiaries after death without paying IHT.

‘In the last Budget, the Chancellor announced that this would be closed from April 2027, which she estimated would impact an extra 10,500 estates.

‘It’s not exactly clear how this would be implemented, and a consultation is currently taking place, which closes in January.

‘More transparency will support more effective estate planning, but in the meantime it is sensible to seek out expert financial advice to help formulate a tailored plan that’s right for you and your family and which takes into account the measures announced in the Budget.’