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Inheritance tax receipts hit new record high

  • By Andrew Sullivan
  • News

Neil Jones, Wealth Management and Tax Specialist at Canada Life, reflects on the increase in IHT revenue:

“It is another record year for the amount paid in inheritance tax. HMRC’s IHT receipts have increased by around £160m in just a year to just on £5.4bn in the 2018/2019 tax year, up from £5.2bn in 2017/2018. This continues a consistent, long term trend of increases that shows little sign of slowing down.

“Just as consistent is that a lot of these payments are preventable. Death and taxes may be the only two certainties in life, but with careful planning around the former, some of the latter is unnecessary.

“It’s crucial to use any reliefs, exemptions and allowances. Starting any planning early is essential and there’s a range of trusts available that can enable clients to make sure more of their money goes to beneficiaries whilst reducing the amount of tax payable when they die. Some of these trusts work on a seven year, rolling basis, so even though they’ve been able to – tax efficiently – pass on money once, they can do it again.”

And the taxman’s busy elsewhere, too

HMRC received £622.8bn in 2018/19 – up almost £29bn in a year.

Income tax is Britain’s most lucrative personal tax – raking in £190.5bn. Despite rises in the personal allowance, the taxman made £27bn more from income tax than in 2014/15.

The second priciest tax in the UK is National Insurance, at £137.2bn, followed by VAT at £131.7bn.

Capital gains tax was up almost £1.5bn in a year – to £9.2bn.

Insurance premium tax reached £6.2bn, more than doubling since 2014/15, and even the soft drinks tax stumped up £240m.

The only major personal tax to drop in 2018/19 was stamp duty land tax – partly as a result of changes to regulations for first time buyers and second home owners.

Sarah Coles, personal finance analyst at Hargreaves Lansdown comments:

“The taxman would make the world’s most irritating dinner date. Everything you do – from earning a crust to forking out a fortune on the high street – the taxman takes a huge bite for himself.

“Over time, those bites are getting bigger: the income tax bill is £27bn more than it was four years ago, and the VAT bill has climbed over £20bn. Meanwhile capital gains tax is up two thirds, the insurance premium tax take has doubled, and the sugar tax has materialised.

In many cases the taxman hasn’t had to increase taxes in order to take more of our money. He just waits for our incomes to rise and asset values to increase, and he’s set for a tax bonanza.

Given that the taxman is so skilled in the art of taking as much of your money as possible, it’s up to us to ensure we’re not paying more than our fair share. It’s essential we take advantage of as much of our allowances as we can, from ISAs and LISAs to pensions – so you can enjoy the fruits of your labours, without the taxman taking a bite.”

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