HMRC trousers billions from yet another property tax

As landlords know better than most, property taxes are a rich seam of revenue for the government.

And now, new figures show that HMRC raked in another £3.5 billion in inheritance tax receipts in the six months to September 2022. 

This is £400m more than in the same period last year and continues a long term upward trend.

Inheritance tax of 40 per cent is usually chargeable if one’s assets exceed a certain threshold, after deducting any liabilities, exemptions and reliefs.

The nil rate band has been £325,000 per single person since April 2009 and will stay frozen at this level up to and including 2025-26.

There is an additional transferable main residence nil rate band of £175,000 available when passing the family home down to children or other direct descendants.

Any unused threshold may be transferred to a surviving spouse or civil partner. So, a couple could currently potentially pass on up to £1 million before IHT might apply.

Alex Davies, chief executive of Wealth Club says: “The government’s inheritance tax take seems to be increasing relentlessly, largely thanks to the steady increase in house prices in recent years pushing more family in the IHT danger zone. 

“With all that’s going on in Downing Street, we can’t see that there is any chance that this money-spinner will be reduced or abolished any time soon.

“The Office for Budget Responsibility has already predicted that next year IHT will bring in £6.7 billion and while only one in 25 estates currently pay this tax, for those that are picking up the tab, we think the average bill could reach £266,000 for the current tax year.

“The increase is being driven by soaring house prices and years of frozen allowances. Rampant inflation will magnify the effect of freezing allowances in the years ahead. Without some review of the rules, more and more families are going to find themselves hit by death duties they might not expect.”

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