Spring Budget unlikely to see inheritance tax scrapped says No.10
Downing Street says talk of inheritance tax cuts are wide of the mark and that fewer than 4% of estates paid the tax.
Scrapping inheritance tax (IHT) will be on the wish list for many property professionals now the March 6 date for the Spring budget has been revealed, but Treasury sources say it’s not an idea being pushed.
SCRAPPING IHT
And The Telegraph reported this week that Prime Minister Rishi Sunak was considering scrapping IHT altogether to create a clear tax dividing line with Labour ahead of the next general election.
But Downing Street is pushing back against the renewed speculation with Sunak’s deputy spokesperson emphasising that fewer than 4% of estates paid the tax.
“The vast majority of estates do not pay inheritance tax and the tax is forecast to contribute almost £10 billion a year by 2028-29 to help fund public services that millions of us rely on,” they said.
Earlier this month latest IHT tax data showed receipts from April to November 2023 were £5.2 billion – £0.4 billion higher than in the same period a year earlier – meaning more tax was paid in just six months than in the entire year a decade earlier.
Monthly receipts patterns in each financial year since 2020 to 2021.Source: HMRC
Julia Peake, Tax and Estate Planning Specialist at Canada Life, says: “While speculation around changes to Inheritance Tax was rife in advance of the Autumn Statement, it yielded very little, with no changes in relation to the nil rate bands nor tax rate.
TAX HAS GROWN“With the latest tax data showing that IHT has delivered weekly receipts of £158mn, perhaps a status quo should come as no surprise given how much this tax has grown over the past few years.
Julia Peake, Canada Life“IHT is on course to deliver £9bn for the treasury by 2027/28, with all signs pointing to another record breaking tax year this year.”
And she adds: “People think that they won’t be caught but with both the Standard and Resident nil rate bands remaining frozen until at least April 2028, and compounded by house price inflation, more people are finding that when their house becomes unencumbered by a mortgage it takes up most if not all of their nil rate bands.
“This results in other assets in their estate being hit by IHT. This will remain the case unless rumours of change materialise next year in the Spring Budget, with the unfreezing of thresholds.”