Figures released by HMRC this morning showed inheritance tax revenues hit £2.1 billion between April and June in the 2024/25 tax year.
This is £83m more than the same period last year, continuing a two-decade trend of increased revenues. The previous full tax year saw total inheritance tax revenues of £7.499bn.
Inheritance tax remains a controversial issue in political circles, particularly given Labour’s pledge not to increase major tax sources such as income tax, national insurance or VAT. However, a recent Wealth Club poll suggests this position may be unpopular, with 42% of respondents favouring a cut in inheritance tax over other taxes.
Nicholas Hight, investment director at Wealth Club, commented: “Inheritance tax remains a hot political issue. The new government has promised not to introduce a whole range of taxes, but there are inevitably spending commitments that need to be met. This means that taxes that have not been formally allocated, including inheritance tax, are in the spotlight.
Reforming non-domicile rules is one potential source of inheritance tax revenue, but with an estimated £100 billion passed through inheritances and gifts in the UK each year, there are likely to be more sources if the government is determined to raise additional funds.
“This puts agricultural and business relief in the crosshairs. But reforms need to be approached sensitively. Abolishing either would be devastating for businesses and family farms across the country, while exemptions for the AIM market, the Enterprise Investment Scheme and the Start-up Investment Scheme provide vital funding for smaller UK businesses. An optimal tax system should focus on the behaviours it encourages as well as the revenues it generates.”