Inheritance tax revenues rise to £5.7 billion in eight months

Inheritance tax revenues reached £5.7 billion in the eight months from April to November 2024, new data from HM Revenue & Customs shows.

This is £600m higher than the same eight months last year and continues the upward trajectory of receipts over the past twenty years.

While year-over-year growth remained steady, estate tax revenues declined month-over-month, reflecting seasonal trends.

In the last full tax year, inheritance tax raised around £7.5 billion for the exchequer.

The increase in inheritance tax revenues has helped push gross receipts from HMRC tax and national insurance contributions to £537.2 billion for the period April to November 2024, an increase of £15 billion on the same point a year ago.

The increase was also driven by increases in capital gains tax and national insurance contributions, which amounted to £6.8 billion, business taxes, which amounted to £2.9 billion, and stamp duty, which amounted to £1.9 billion .

Just Group communications director Stephen Lowe said: ‘Inheritance tax is set for another record year, with revenues already more than £550 million higher than the total for the same period in 2023/2024.’

Currently, only one in twenty estates is subject to inheritance tax, but government estimates suggest 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 £2 billion a year, according to the Chancellor.

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

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

‘In addition, annual revenues are now £0.6 billion higher than this time last year and we expect this to accelerate further in the coming months and years.

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

‘For those with specific inheritance tax concerns, strategic financial planning will be crucial in the coming months.

‘Advisors tell us they have seen an increase in demand for advice, which could widen the advice gap even further. 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, tax and financial planning expert at Quilter, said: ‘Christmas has come early for the Government as this morning’s figures from HMRC show inheritance tax receipts for the period April to November 2024 have increased to £5.7 billion, an increase of £0.6 billion compared to the same period last year.’

He added: ‘More and more people are getting caught up in inheritance tax, and this is only going to increase. Now that the IHT threshold has been frozen until 2030, combined with the pensions that will be added to the taxable estate from April 2027, the public treasury will receive a significant addition in the coming years.

‘Farmers will also start to increase these figures as support for agricultural properties becomes less generous.

‘This could result in farming families facing higher inheritance taxes, which could force difficult decisions about the future of their farms. “In addition, the government’s changes to the AIM share relief and Business Relief are expected to boost revenues.”

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

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

‘The new year will also bring some additional clarity to the exemption which 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 said would impact a further 10,500 estates.

‘It is not clear exactly how this will be implemented. A consultation is currently taking place, which will conclude in January.

‘More transparency will support more effective estate planning, but in the meantime it is wise to seek expert financial advice to help formulate a tailored plan that suits you and your family and that takes into account the measures in place the Budget have been announced.’