Inheritance tax receipts soar while stamp duty slides

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, comments on the latest HMRC tax data, which shows that inheritance tax receipts soar while stamp duty slides.

Key points from publication:
    • Inheritance tax receipts in April 2023 are up £0.1bn on a year earlier.
    • The nil rate band for inheritance tax (£325,000) has been frozen since 2009.
    • Gifting allowances such as the annual and small gift exemptions have also not increased for many years.
    • Stamp duty taxes were down £0.7bn from a year previously.
    • Lower transactions in April and changes to stamp duty in the Budget contributed to the fall.
Helen Morrissey says:

“Inheritance tax receipts continue to soar, up £0.1bn in April against the previous year.

“The ascent has been steep over the years. In 2022-23 we paid just over £7bn in IHT compared to £5.2bn just five years previously.

“This is primarily down to a buoyant housing market pushing up prices but also a complex set of nil rate bands and gifting thresholds that have not been increased in years.

“The current nil rate band of £325,000 has been at this level since 2009 while the annual exemption of £3,000 and small gift exemptions of £250 also haven’t moved.

“As it currently stands thresholds have been frozen until April 2028 so we will continue to see more people drawn into the inheritance tax net until these thresholds are raised.”

Stamp duty:

“The property market has been teetering on a precipice for quite some time.

“The market grew strongly earlier in the year before the cost-of-living crisis really started to bite and people had to put their home owning dreams on the backburner.

“The disastrous mini-Budget also did real damage with mortgage deals being whipped off the table and rates hiked.

“We’ve seen rates start to come down, but people are still feeling nervous – inflation remains high and the pressures on people’s budgets haven’t eased which led to lower transactions in April.

“This, along with stamp duty changes made in the Budget means stamp duty receipts slid £0.7bn lower against the same time last year.

“It’s still very much a case of watch and wait with regards to which way the property market will go in the coming months.”

 

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay