Looking further ahead, IHT receipts are still expected to rise. The tighter IHT policies announced in the Autumn Budget 2024 are expected to push the IHT take to £14.5 billion in 2030-31, marking an increase of 67% over a five-year period according to the OBR’s estimates.
David Cooper, director at retirement specialist Just Group, commented: “Inheritance Tax has been a powerful revenue generator for the Treasury following four consecutive years of record tax takes thanks to frozen thresholds and rising asset prices. While the tax is just about on track to clock up a fifth consecutive annual high and meet the OBR’s estimate, there are signs that the rate of increase has flattened this year. The Treasury will be banking on the policies announced at the Autumn Budget 2024 to provide fresh momentum to meet the 67% increase in revenue forecast over the next five years. In a changeable fiscal environment, anyone who is concerned that their estate may be subject to IHT should get an up-to-date valuation of their estate, including an assessment of their property wealth. A professional adviser can help people who want to manage their estate in an efficient way and ensure as much as possible can be passed on to loved ones.”
Simon Martin, Head of UK Technical Services at Utmost: “Despite a slowdown in the rate of growth, Inheritance Tax receipts are on course for another record-breaking year underpinned by resilient property prices and asset inflation. However, we may see behavioural shifts in the housing market as a result of the ‘Mansion Tax’ set to come into force from April 2028, which could yet temper the pace of future growth. The decision at Autumn Budget 2025 to maintain the freeze on nil-rate bands and allowances means that a growing number of estates will be drawn into the IHT net in the years ahead. When set against the structural changes announced a year earlier, Inheritance Tax is becoming an ever more dependable source of revenue for the Treasury. Business owners and farmers did receive an early Christmas present in December, with the announcement by the Government to increase the 100% Agricultural and Business Property Relief threshold to £2.5m. This, combined with the ability to transfer this threshold on first death to a surviving spouse or civil partner, will go some way to alleviating the concerns raised over this measure. All eyes now turn to the impact of including pension death benefits in an individual’s estate for Inheritance Tax purposes from April 2027 onwards which will necessitate a major strategy shift in how families approach estate planning.”
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