IHT receipts continue year-on-year rise - Tilney Smith & Williamson comment

New data out today from HRMC shows that IHT receipts for April 2021 to November 2021 were £4.1 billion - £0.6 billion higher than in the same period a year earlier.

Julia Rosenbloom, tax partner at Smith & Williamson, part of wealth management and professional services group Tilney Smith & Williamson, commented: “The latest reported year-on-year rise in IHT collections is an early Christmas present for the Chancellor who needs to do everything he can at the moment to sure up the country’s finances while the impact of the Omicron variant of Covid-19 remains unknown. As if the need to pay for the ambitious spending commitments announced in the last Budget isn’t enough, the threat of Omicron could require the Treasury to find more money for compensating businesses if there is a need to shut down parts of the economy to slow the spread of the virus, and tax receipts could therefore be vital in the months ahead.

“If the uncertainty surrounding Omicron persists the Chancellor could be even more tempted to consider increasing personal taxes in the next Budget, the date of which is currently unknown but could come as early as the spring. People should continue to carefully consider their tax planning and make the most of current allowances before any further possible changes are introduced. For those who haven’t yet finalised their Christmas shopping, making gifts is an option that may not only help reduce an IHT bill, but if you are giving to a charity you would also be supporting a cause that you really care about.

“Gifting to charities can provide relief which can reduce an individual’s income tax liability. Gifts to qualifying charities are also exempt from inheritance tax and if an individual leaves broadly 10% of their estate to charity in their Will, their estate would only suffer a 36% inheritance tax rate, rather than the usual 40%. Those feeling particularly generous could even consider setting up their own charitable trust, claiming appropriate tax reliefs so that as much as possible goes into the pockets of the charities.”