The government’s inheritance tax (IHT) receipts between April and August 2024 totalled £3.5bn, HMRC’s latest monthly bulletin has revealed.

This represents a £300m increase compared to the same period last year and continues the trend of rising IHT receipts, putting it on course for another record-breaking year.

The Office for Budget Responsibility has estimated that IHT receipts will be £9.7bn in 2028/29, indicating the tax take will maintain its upward trajectory.

HMRC’s latest statistics come amid widespread rumours that IHT could be one area that the government is looking at to help fund economic recovery.

The continued uptick in IHT receipts will “no doubt stoke the rumours and debates” about whether the tax will be increased in Labour’s first Budget, noted Quilter tax and financial planning expert, Shaun Moore.

“As Labour navigates the complex issues surrounding IHT in the upcoming budget, there is a strong argument for simplifying the IHT system and making it more appealing to gift during one’s lifetime,” Moore continued.

“The complexity of the current system often leads to confusion and inequities. A simpler system could help reduce the administrative burden for both taxpayers and HMRC, while also making it fairer.

“Similarly, increasing the gifting threshold would encourage earlier wealth transfer, reducing future IHT liabilities, and could boost consumer spending.”

Meanwhile, Evelyn Partners tax partner, Laura Hayward, argued that it was “by no means certain” that the Chancellor, Rachel Reeves, would target the transfer of wealth to raise more tax revenue.

However, if she does, then Hayward believed that including defined contribution pension pots in the value of estates for IHT purposes was the “front-runner in the line-up of possible changes”.

“This comes on top of speculation that the Chancellor could tighten up the seven-year rule on gifting by changing the ‘potentially exempt transfer’ rules to cut down on IHT relief, which has got some families wondering whether they should ‘set the seven-year clock ticking’ on a lifetime transfer now or in the next few weeks,” she stated.

“Large gifts that go beyond the annual gifting limits can be made at any time, but if the giver dies within seven years then the gifts themselves could be taxable (if they exceed the nil-rate band) or could be included in the estate for the calculation of IHT.”

Nucleus technical services director, Andrew Tully, said that advisers can help manage an estate by setting up trusts, making use of gift allowances, and using a pension to pass on wealth to family in a tax efficient way.

“The ever-increasing IHT tax take may give the government food for thought as we approach next month’s Budget,” he continued.

“Changes could be made such as scrapping or updating the rules on agricultural land and business relief. Currently, a person can claim up to 100 per cent relief on the inheritance of agricultural land if it is being actively farmed. This could be reduced, or certain limitations placed on the maximum value of the relief.

“There could be a tightening of qualifying criteria for business relief, perhaps relating to unlisted shares and AIM portfolios. Although that could be difficult to implement and may not tie in with the desire to increase investment in the UK.”

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