Revenue generated from inheritance tax receipts in the six months to September has fallen 11.3 per cent compared with the same period the previous year.
According to data from HM Revenue & Customs published this week, in the first 6 months of the new tax year IHT receipts were down £316m, at £2.4bn, compared with the same period in 2018.
The figures were skewed slightly as in May and June 2018 IHT receipts were unusually high at £487m and £507m respectively due to an increase in the number and value of payments.
In March 2019 receipts were also particularly high at £527m, which HMRC said could be due to individuals bringing forward tax payments to avoid higher probate fees.
Alex Davies, chief executive and founder of Wealth Club, said: “Whilst overall tax receipts rose by £12.2bn, perhaps surprisingly inheritance tax receipts fell by £316m. HMRC has not provided any commentary on why this might be the case.
“However, it stands to reason that we might be starting to see the impact of the residence nil rate band, which became effective in 2017 to help people pass on their family home IHT free.”
The nil rate band, also known as the IHT threshold, is the amount up to which an estate has no IHT to pay. The NRB for 2019/20 is £325,000 and any estate which exceeds this threshold is charged 40 per cent in IHT.
Unused NRB and residence nil rate band can be transferred to a surviving spouse or civil partner.
The RNRB is an additional threshold available where the deceased left a residence, or the sale proceeds of a residence, to their direct descendants. The RNRB for 2019/20 is £150,000, an increase of £25,000 from 2018/19.
Meanwhile, chancellor of the exchequer Sajid Javid has previously hinted that the government is poised to either scrap or make reforms to the unpopular IHT regime later this year.
Speaking at the Conservative Party conference this month, Mr Javid said although reforms had already been made to IHT, scrapping the tax altogether was something that the government may consider in the near future.
The chancellor acknowledged the unpopularity of IHT among the public with claims that it is unfair people’s income gets taxed both in life and at death.
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