Taxes on the rise

The positive impact of a series of tax rises on government coffers has been revealed in new figures just published.

Statistics from HM Revenue and Customs (HMRC) show its total receipts for April 2022 to March 2023 were a record £786.6billion and £71.1bn higher than the same period a year earlier.

Income Tax, Capital Gains Tax and NICs brought in £440bn for Treasury – £47bn higher than the 2021-2022 total.

Business taxes, including Corporation Tax and the Energy Profits Levy showed overall receipts of £84.9bn, which is a £17.5bn increase year on year.

And when it comes to Inheritance Tax (IHT) records continue to be broken. Here, the total haul for 2022/23 reached £7.1bn, surpassing the previous record of £6.1bn set last year by £1bn.

That figure has sparked comments that IHT is ‘no longer for the wealthy’ and re-ignited the calls we reported on last month for reform and action to be taken on the long-frozen tax threshold.

The IHT nil-rate band, which is the maximum amount a person can inherit before paying the tax, has been stuck at £325,000 since 2009 – despite rising house prices.

Last November, chancellor Jeremy Hunt announced that the nil rate would remain frozen until at least April 2028, despite inflationary pressures.

And as we also pointed out, the IHT gifting allowance of £3,000 a year has remained unchanged since 1981.

Experts say that an ever-growing proportion of estates are likely to become liable to pay IHT, despite the slowdown in the housing market.

Estimates released at the Budget in March suggested that over the next five years IHT would bring in £38bn for the Treasury.

Given the latest figures it is worth repeating the message that there are ways in which the existing IHT regime can currently benefit your own estate planning and ensure a fairer distribution of your assets through your family.

As with most tax issues the key here is to start your planning early and to get a good handle on your estate. Having a clear strategy is also important.

The £3,000 a year annual gift allowance is good place to start. So is reviewing your will and making sure your assets will be dispersed the way you wish. Ask yourself the simple question: “Is my estate planning up to date?” If not, now is the time to act.

Meanwhile, figures show that homebuyers paid £1bn in Stamp Duty land tax in March, an increase of 19 per cent on the previous month. In cash terms, that is a rise of £164m.

This is another tax where records are being broken. Across the 2022-23 tax year £15.4bn was paid out in, an increase of nine per cent on the £1.3bn the previous year.

However, this is expected to drop sharply in the 2023-24 tax year. The Office for Budget Responsibility for has forecast a 4.7bn fall as a result of the anticipated lower numbers of property transactions.

• To discuss any issues raised in this article and any tax issues please contact me on 01772 430000