Inheritance tax receipts for April 2024 to February 2025 hit £7.6bn, a £0.8bn rise on the same period last year.
Figures from HMRC revealed the upward trajectory of IHT receipts was continuing, with this financial year already setting an annual record and on course to exceed last year’s total by nearly 12 per cent.
Andrew Zanelli, head of technical engagement at Aberdeen Adviser said: “IHT continues to bring in more money than ever. And the plan to bring pension pots into the fold, coupled with frozen thresholds, means more and more people could face a tax charge.
“From our discussions with advisers, we’re hearing some people are making hasty pension withdrawals or holding back on pension saving to try and avoid IHT issues down the line.
“Now, more than ever, it’s critical to keep the enduring power of pensions in mind as for most people, they’re going to remain the most efficient way to save for retirement compared to other tax wrappers.”
Andrea Jones, head of Irwin Mitchell Private Client Advisory, believed today’s figures offered “a glimmer of spring sunshine for the Treasury ahead of what could be a chilly reception for next week’s statement in Parliament.”
“With IHT receipts reaching record highs, this trend signals more significant changes on the horizon. If current policies remain unchanged, we could see the number of estates liable for IHT potentially more than double over the next few years,” she added.
Other tax
Elsewhere, income tax, CGT and NICs receipts for April 2024 to February 2025 were £448bn, £15.5bn higher than the same period last year.
While PAYE income tax and Nics receipts for April 2024 to February 2025 hit £384.9bn, which was £12.6bn higher than the same period last year.
The driving force behind these rises continued to be fiscal drag, according to Shaun Moore, tax and financial planning expert at Quilter.
He said: “By keeping income tax thresholds frozen since 2021 — and extending this freeze until 2028 — the government is pulling more taxpayers into higher rates each year.
“As wages increase, many more earners find themselves paying 40 per cent or even 45 per cent on a portion of their income, generating billions in extra revenue without an explicit tax hike.
“National Insurance changes are also playing a role. While employee NICs were cut from 12 per cent to 10 per cent in January 2024, employer NICs will rise from 13.8 per cent to 15 per cent in April 2025, and the threshold at which businesses start paying NICs will be slashed from £9,100 to £5,000.
“These changes will increase employment costs, with potential knock-on effects on hiring and wage growth.”
alina.khan@ft.com
