IHT receipts hit record high in 2023/24

The government’s inheritance tax (IHT) receipts hit a record high in the 2023/24 tax year, despite the number of IHT-paying estates falling year-on-year, data from HMRC has revealed.

IHT take increased by 5 per cent year-on-year, rising from £6.7bn in 2022/23 to £7.03bn in 2023/24.

The average IHT bill also increased over the year, rising by 9 per cent from £212,000 to £231,000.

Despite the record high tax take, the number of IHT-paying estates fell by 3.6 per cent over the same period, from 31,500 to 30,400.

However, they represented 4.72 per cent of UK deaths in 2023/24, up from 4.63 per cent the previous year.

This was the highest level since the all-time peak of 5.96 per cent in 2006/07.

HMRC noted that the average effective tax rate paid by taxpaying estates was 13 per cent, which it said reflected the impact of exemptions, reliefs, and tax-free allowances.

The combined value of agricultural and business property relief set against assets was £5.96bn in 2023/24, an increase of 13 per cent compared to the previous tax year.

“Rising asset values and frozen tax-free thresholds mean more people may find themselves with an IHT liability, even if they do not consider themselves particularly wealthy,” commented St. James’s Place head of advice, Claire Trott.

“IHT planning is rarely something that can be dealt with effectively at the last minute. Planning should never simply be about giving assets away to reduce a future tax bill. People need to retain enough to support their lifestyle and meet potentially significant later-life care costs.

“The inclusion of most unused pension funds within estates for inheritance tax purposes from April 2027 will add another layer of complexity.

“It will make it increasingly important to consider pensions alongside property, savings and investments as part of one joined-up estate plan.

“Taking advice early can help people understand their options and pass on wealth in a way that is both tax-efficient and consistent with their wider wishes.”

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