HM Treasury raked in £6.3 billion in property-related tax in the 10 months from April 2023 to January 2024 according to data released by HMRC.

This is £400m more than in the same period just one year earlier, and demonstrates a continued upward trend of increasing property-related tax bills.

While just four per cent of estates are picking up the tab, the proportion of families affected is higher and the freeze on IHT thresholds combined with long term increases in property prices is pushing the tax-take on an upwards trajectory.

Advisory firm Wealth Club calculates that for those who have to pay, the average bill could increase to £238,000 this 2023/24 tax year, with over 30,000 families having to hand over part of their inheritance to HMRC.

This is a steep 11.2 per cent increase from the £214,000 average paid just three years ago and a 14.2 per cent rise in the number of estates paying the tax. 

Nicholas Hyett, Investment Manager at Wealth Club, says: “The government seems to be rowing back on potential tax cuts at the March Budget. And with IHT an ever growing source of revenue, you can see why the Chancellor might find it difficult to cut this most unpopular of taxes. Any shortfall would mean higher tax or lower spending elsewhere.”

Helen Morrissey of business consultancy Hargreaves Lansdown adds: “The jury is out on whether reducing the main rate is the best way to go though. Cutting the main rate could also be seen as benefiting richer estates who would have larger bills to pay.

“Raising the long-standing £325,000 threshold or combining it with the residential nil rate band could potentially have a wider impact in that smaller estates, particularly those who have inadvertently passed the threshold due to house price growth could be lifted out of paying IHT and spare themselves a nasty surprise bill. 

“It would also help ease the burden that falls disproportionally on single people. Increasing thresholds – for instance increasing gifting allowances – could also encourage more people to think about how their assets could be used to support their family members during their lifetime.”

Blog Post from Letting Agent Today

See details of our CHG Guaranteed Rent Scheme here