Government inheritance tax receipts rise to £2.1bn between April and July

There has been a spike in demand for advice in IHT planning in the past year

The government bought in £2bn in inheritance tax (IHT) between April and July.

Compared to the same period of time in 2020, it is an increase of £0.5bn.

HM Revenue & Customs confirmed it received in the region of £575m in July 2021. It is the highest amount received in a single month in recent years.

The government department suggested that the figure could have been higher as there were more wealth transfers taking place during the pandemic.

Inheritance tax receipts are expected to keep going up after the chancellor‘s decision earlier in the year to freeze the nil rate band until 2026.

Commenting on HMRC data showing IHT receipts for April 2021 to July 2021 were £2.1bn, £0.5bn higher than in the same period a year earlier, Andrew Aldridge, Partner at Deepbridge Capital, said: “Today’s data from HMRC showing an increasing uptake in receipts for inheritance tax highlights how easy it is for individuals and couples to generate a potentially large inheritance tax bill when they die, despite not being what they may perceive as ‘wealthy’.”

“Despite the Openwork Partnership, one of the UK’s largest networks of financial advisers, report a 38% spike in demand for advice on IHT planning in the past year, with more than one in ten clients wanting to discuss it, these latest figures clearly show that many are still not seeking proper financial planning which can make it possible to pass on more of their wealth to their family.”

“According to research undertaken in conjunction with the Deepbridge Estate Planning Service, the most commonly used IHT planning tool is gifting, considered for most or every client by 94% of financial advisers, followed by Business Relief, considered by 78% of advisers, ahead of trusts (73%) and life policies (67%). The research also showed 76% of IFAs believe that their use of Business Relief propositions will increase over the next two years, with less than 2% saying they saw their use of the tax break decreasing,” Aldridge added.