The Government is set to rake in almost £8billion as a result of inheritance tax during the current financial year, a shocking new analysis has suggested.
And one expert has described the sobering statistics as proof that “they get you while you’re living, and then get you when you’re dead”.
Inheritance tax is a 40 percent levy which is applied to estates valued in excess of £325,000 once a person dies.
Research published by real estate investment platform easyMoney suggests the total which will be paid to HMRC between May 2023 and April 2024 will be £7.8billion – which would be a record annual figure.
The data shows that in 2022/23, the total amount of inheritance tax paid increased by 17.1 percent, the second largest annual rise for the last 20 years, only exceeded by a 22.2 percent increase recorded in 2015/16.
HMRC received more that £7billion in inheritance tax in 2022/23, £1billion more than the previous year, making it the largest UK inheritance tax collection ever recorded, and amounting to 0.9 percent of that year’s overall tax payments.
Over the first four months of the current financial year, HMRC has collected £2.6billion – and if the trend continues, the UK’s total inheritance tax bill will hit £7.8billion, shattering last year’s record total by 10 percent.
Jason Ferrando, easyMoney’s CEO, said: “People are working harder than ever, earning less and less in real terms, and now we learn they’re also paying more inheritance tax than ever before.
“They get you while you’re living, and then get you when you’re dead, it seems.”
He explained: “A rise in inheritance tax normally means one of two things – either more people have died, as was the sad case during the worst of the pandemic years, or people are leaving behind more money than they did before.”
With this second point, it was possible to look at the rapid increase in house prices in order to understand why inheritance taxes were on the rise, Mr Ferrando continued.
He said: “The more valuable your legacy, the more tax will be charged.
“It’s understandable that some people feel frustrated by this form of taxation, and there are ways to minimise how much can be taken when you die.
“Living inheritance, money you pass down before you pass on, is the most popular way of reducing the death tax.
“This can be achieved through equity release, gifting, creating a trust, or even political and charitable donations.”
Mr Ferrando added: “Anyone who is keen to maximise the amount they are able to leave to their loved ones instead of HMRC should appoint a financial advisor or solicitor who will be able to talk you through all of your various options.”
Prime Minister Rishi Sunak is reportedly considering including a pledge to scrap inheritance tax in the next Conservative Party general election manifesto.
One party insider told The Times: “It’s about being an aspirational country. You work hard, play hard and pass on your wealth. It’s a live discussion.
“Even though most people don’t pay inheritance tax it polls incredibly well. It would be a totemic offer.”
However, a No 10 source was cagier, saying: “The PM has repeatedly said that he wants to cut taxes for people.
“As Conservatives that is obvious, we want people to keep more of their own money.
“But the current economic situation means that Government is completely focused on halving inflation – to help people have more in their pockets at the end of each month.
“This kind of future-scoping speculation just isn’t on his mind at the moment and requires a different kind of economic environment to the one we are operating in.”
