HMRC noted an increase in inheritance tax receipts, receiving £3.2 billion during Q2 2023, surpassing the £2.9 billion reported the previous year.
Julia Peake, a tax and estate planning specialist at Canada Life, characterised these figures as indicative of 2023 potentially becoming a "record-breaking year in IHT receipts for HM Treasury."
Furthermore, HMRC reported that June 2023 marked the highest monthly total on record, with this exceptional month potentially influenced by the recent uptick in interest rates. Suggesting that the recent interest rate hikes might have prompted personal representatives of some estates to expedite their tax payments. Nonetheless, HMRC emphasied that confirmation awaits the availability of complete administrative information.
Quilter's tax and financial planning expert, Rachael Griffin, delved into the political ramifications of HMRC's findings, emphasizing, "The growing revenue presents a policy conundrum for the government." She elaborated on the pressing nature of this issue as election season approaches, with more Conservative backbenchers advocating for inheritance tax reform or even its complete abolition as a potential "vote-winning tactic."
"While such a move may be popular with the public," Griffin noted, "the government might be hesitant given the steadily increasing revenue it generates from this tax."
Laura Hayward, a tax partner at Evelyn Partners, further underscored the financial significance of rising inheritance tax receipts for the Treasury, emphasizing that this trend shows no signs of abating.
This surge in inheritance tax receipts contributed to HMRC reporting a significant overall revenue increase for Q2 2023, totaling £331.1 billion over the three-month period—an impressive £19.8 billion surge compared to the same period in 2022.
HMRC's Q2 2023 report highlighted a significant increase in receipts across income tax, capital gains tax, and national insurance contributions, reaching an impressive total of £185.8 billion. This represented a noteworthy £10.6 billion surge compared to the same period in 2022.
Rachael Griffin pointed out, "With the reduction of the additional rate income tax threshold from £150,000 to £125,140, we should anticipate further escalations in the months ahead."
Moreover, Q2 2023 also saw an upswing in receipts for PAYE income tax and NIC1, climbing from £161.2 billion in 2022 to £170.7 billion.
Furthermore, environmental taxes, encompassing landfill tax, aggregate levy, and climate change levy, aggregated to £1.5 billion between April and August, although this figure was £90 million lower than the corresponding period in the previous year. HMRC attributed this dip in receipts to timing effects, which partially offset the higher figures observed in July.