Inheritance Tax (IHT) Revenue Hits £1.1bn in May 2022

HMRC has reported that inheritance tax receipts for month April 2022 to May 2022 were £1.1 billion, which is £0.1 billion higher than in the same period a year earlier.

HMRC reports that IHT receipts in April 2019 were particularly high, reflecting announcements (and subsequent delays and cancellations) of rises to probate fees in England and Wales, which is likely to have caused executors to bring forward tax payments to avoid the prospective higher fees.

The lower IHT receipts last year, in April and May 2020, were due to a temporary issue where HMRC was unable to accept cheques for payment of IHT due to Covid-19, which was resolved, hence the peak in receipts in June last year.

Comment

There were also higher IHT revenues in October to November 2020, March to August 2021, and record high receipts in March 2022. 

These were expected due to a combination of:

• Higher volumes of wealth transfers i.e., deaths that took place during the Covid-19 pandemic.
• Recent rises in property and assets values.
• The government’s March 2021 decision to freeze IHT tax free thresholds at their 2020 to 2021 levels up to and including 2025 to 2026.

Covid-19 debt must be paid for from somewhere and even just an average £0.1bn IHT per month, is £1.2bn a year and £12bn over 10 years.  Every little helps towards that £500bn of covid-19 debt.