Record Inheritance Tax Receipts received by HMRC during the Coronavirus Pandemic

HMRC has recently released its new Inheritance Tax (IHT) revenue figures, for payments which have been received during Covid-19.
Due to higher increase in deaths at the start of 2021 and the delays to Grant of Probate, this resulted in July 2021 becoming HMRC’s highest IHT receipt revenue as they received £571 million during that month alone.
During the period of April 2021 to July 2021 HMRC’s actual IHT receipt total equated to around £2.1 billion, which is actually around £0.5 billion higher than the IHT receipts which they received during April 2020 to July 2020.*
 
Why does HMRC believe that Inheritance Tax receipts have increased during the Coronavirus Pandemic?
 
In HMRC’s monthly bulletin on tax receipts and national insurance contributions for the UK (released on 20^th August 2021), it confirms that higher IHT receipts were received during the pandemic in the months of October 2020, November 2020 and March 2021 to July 2021. HMRC believes that this is because “higher volumes of wealth transfers took place during the Covid-19 pandemic”, although, they are unable to verify this statement at present until they have seen the full administrative data on IHT receipts.*

What do financial advisors and analyst’s think about HMRC’s Inheritance Tax receipts increase?
 
Sarah Coles, a personal finance analyst at Hargreaves Lansdown has commented on the IHT revenue figures. “The pandemic has pushed Inheritance Tax and Stamp Duty on property purchases to record highs in July. The horrible rise in deaths from coronavirus at the beginning of this year meant an increase in IHT as those estates finally made their way through Probate.”

Whereas, Julia Rosenbloom, a tax partner at Smith & Williamson commented on the IHT revenue figures by stating that “One of the key drivers for the uplift will no doubt be the announcement in this year’s Spring Budget that both the nil rate and residence nil rate bands are to be frozen until at least April 2026, resulting in increased IHT bills for families as more estates are brought into scope on the back of soaring property and share prices.”

Julia goes on to confirm that she believes that “Increases to IHT charges could affect many and some may need to go as far as selling family homes to pay their IHT bills. Starting tax planning as soon as possible will mean that people can make the most of their current allowances before any new reforms are introduced.”*

                                                                                                                                      
If you would like to discuss tax and estate planning, in order to take full advantage of any current tax allowances which you and your spouse/partner have available, please contact our Wills, Trusts and Probate department who will be delighted to assist you with these and any planning needs and requirements which you may have on 0161 926 9969 or by email at wtp@mlplaw.co.uk. 

* Sources Used