Inheritance Tax 2023/24: A Record‑Breaking Rumble
HM Revenue & Customs just dropped the latest figures: from April to December 2023 the country collected £5.7 billion in inheritance tax (IHT). That’s a tidy £0.4 billion bump over the same period last year and a 7.5 % growth that puts the Treasury on track to haul in a whopping £7.6 billion for the 2023/24 tax year.
Previously, 2022/23 hit £7.1 billion, the all‑time high, a jump of about a billion from 2021/22. The next year looks set to exceed that marked record.
Why Is This Happenin’?
- Old‑school rule‑book: The IHT threshold is still locked at £325,000 since 2009. Housing prices and investment assets have been climbing, so more estates now cross the line that triggers tax.
- Death’s not a free lunch: Covid hit mortality rates, swelling the number of estates that become taxable.
- Only a small slice of families hit: Even with the surge, IHT still lands on a tiny fraction of all estates, but it’s a tax that everyone hates.
Could the Chosen One (Jeremy Hunt) Cut the Tax?
The whispers in Parliament tonight centre on two possibilities:
- Lower the 40 % rate – a move that used to pop up after the Autumn Statement.
- Raise the nil‑rate band (NRB) – this would protect the middle‑class families who now find their estates poking over the threshold.
The NRB is stuck at £325,000 while we’ve seen inflation hike the “real worth” of houses and stocks. If the band doesn’t grow with inflation, every century the number of households paying IHT swells.
Why It Matters to the Public
Hunting a cut might help the Conservatives appeal to the core voter base. It could also help the public finances by letting the budget deal with a fiscal drag from frozen allowances that now tack more revenue when incomes rise.
Tipping the Scales: What Individuals Can Do
- Keep the Will in Tippin’ Shape: Regular updates help avoid surprise tax hits.
- Use the Annual Gifting Allowance: Give away a little before the year ends to shave the estate down.
- Tap Into Pension Pots: Defined contributions are very IHT‑efficient; max out your annual pension allowance to move wealth out of the taxable pool.
When the tax year wraps up, those pragmatic savers will be lining up their actions to dodge a future IHT load. In the meantime, it’s “all the right moves” for a hopeful cut — maybe in the manifesto, maybe in the spring budget — and we’ll keep a sharp eye on this evolving saga.
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