Figures released this morning by HM Revenue and Customs (HMRC) show that inheritance tax revenue from April to June in the 2024/25 tax year was £2.1 billion.
This figure is £83 million higher than the same period last year, continuing a trend of rising revenues that has been going on for two decades. In the previous full tax year, inheritance tax revenues were £7.499 billion.
Inheritance tax remains a controversial issue in political circles, especially given the Labor Party’s pledge not to increase major sources of tax such as income tax, national insurance or VAT. However, a recent survey by the Wealth Club shows that this position may be unpopular, with 42% of respondents favoring inheritance tax cuts over other taxes.
Nicholas Hyett, Investment Manager at Wealth Club, commented: “Inheritance tax remains a political hot potato. The new government has pledged not to raise a raft of taxes, but there are inevitably spending commitments that need to be met. This means that taxes that are not officially defined, including inheritance taxes, are firmly in the spotlight.
Reforms to the non-domestication rules are a potential source of an inheritance tax windfall, but with an estimated £100 billion passed on in inheritances and gifts each year in Britain, there is likely more to it if the government is determined is to raise additional money. .
This puts agricultural and business emergency services in the line of fire. But reforms must be approached sensitively. Abolishing both completely would be devastating for family businesses and farms across the country, while relief for the AIM market, the Enterprise Investment Scheme and the Seed Enterprise Investment Scheme will provide crucial funding for Britain’s smaller businesses. The optimal tax system should focus on the behavior it encourages and the revenue it generates.”