Inheritance tax receipts up by £0.3bn

Inheritance tax (IHT) receipts totalled £2.4 billion for April to July 2022, £0.3bn higher than last year, data released by HMRC shows.

The increase was due to the volume of wealth transfers that took place over the COVID-19 pandemic, recent rises in asset values and the Government's decision in March 2021 to maintain the IHT tax-free thresholds at their 2020/21 levels up to including 2025 to 2026.

HMRC said the record high receipts in June 2022 alone (over £700 million) can be attributed to a small number of higher-value payments than usual.

Other periods that saw higher IHT receipts were October to November 2020 and March to August 2021, all considered due to the pandemic.

IHT receipts also hit a particularly high level in April 2019 due to a rise in probate fees in England and Wales, likely due to executors bringing forward tax payments to avoid higher fees.

Due to a COVID-19-related issue, HMRC could not accept cheques for IHT payments between April and May 2020, explaining the peak in June once the issue had been resolved.

Inheritance tax is only paid if a deceased person's estate is over a certain threshold. This is known as the nil-rate band, enabling up to £325,000 to be passed on before IHT is charged.

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