Inheritance tax receipts for April 2024 to December 2024 are £6.3 billion – £0.6 billion higher than the same period last year and means receipts are on track to beat last year’s record £7.5bn.
Income tax, capital gains and National Insurance receipts for April 2024 to December 2024 are also £330.9 billion – £9.2 billion higher than the same period last year.
In the last three months of 2024, we paid £808 million in capital gains tax. That’s up 60% in a year.
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown, says that inheritance tax take continues to creep up and that by the end of December, receipts had already hit £6.3bn making it highly likely that 2024-25 will be a record year for HMRC.
SOARING PROPERTY VALUES
She says: “A mixture of soaring property values mixed with frozen thresholds have done the job of pulling an ever-increasing number of families into paying inheritance tax. With government plans to make pensions subject to inheritance tax from 2027, we will see even more families hit with a bill in future.
“If you’re worried about inheritance tax, and you were planning to give your family gifts at some point, it’s worth considering the timing.
“It’s vital not to give away too much too soon as it could leave you struggling later on, but you can give £3,000 within your annual allowance, regular gifts from surplus income, or start the clock ticking on a potentially exempt transfer which falls out of your estate after seven years.”
BUDGET DELIVERED
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, adds: “The Budget delivered for the taxman. The capital gains tax rate was raised for stocks and shares, and the CGT bill rose in December to £335 million: its highest since March.
“In the last three months of 2024, we paid £808 million in CGT. That’s up an impressive 60% in a year. Over the entire year, CGT is up 13%.”
ESSENTIAL PLANNING
She adds: “The rise is partly a result of the higher rates introduced in the Budget, but also due to the fact that so many people brought gains forward ahead of the Budget, so they could pay any tax while they knew where they stood. The changes make it even more essential to plan ahead and consider realising gains gradually and using share exchange (or Bed and ISA) to protect them from tax every year.
“Elsewhere, there was no relief from the grinding misery of rising taxes. The freeze on income tax remains until 2028, so every round of pay rises pushed more people into paying tax, and more into higher tax bands.”
