Inheritance Tax (IHT) revenue from April 2021 to October 2021 was Â£ 3.6bn according to HMRC data released this week, Â£ 600m more than at same period in 2020. Ami Jack, National Tax Manager at Smith & Williamson, noted Rishi Sunak. will probably welcome this news.
“The Treasury must do everything to replenish its coffers”
Ms Jack noted that the growing amount collected was not surprising given recent government commitments.
“Following the Chancellor’s vast spending commitments announced in the recent budget, the Treasury must do everything in its power to increase its coffers to fund the plans,” she said.
âThe continued increase in IHT collections from year to year will therefore be welcomed by the Treasury. The budget was light on personal tax announcements, with no major changes for the IHT. Outside the budget, however, the government announced a 1.25% increase. social security contributions and income tax on dividends from April 6, 2022, demonstrating that he is not afraid of tax increases and that there could be other changes to come in this area personal taxes in the short and medium term.
With that in mind, Ms. Jack urged families to consider their tax strategies in the face of any potential changes or increases.
She continued, âWith the outlook for personal taxes uncertain, people should continue to carefully review their tax planning and make the most of the current allowances before introducing other possible changes. gifting and investing in a tax efficient manner, there are a number of areas of tax planning that can help lower an IHT bill.
READ MORE: Inheritance tax: Brits without a will fail to lower the IHT bill
“The tax authorities may be rubbing their hands with joy”
The IHT is not the only tax to be increased. The same data from HMRC showed the British paid Â£ 392 billion in taxes between April and October of this year, which is an increase of Â£ 99.8 billion from the same period a year more early, or 34%.
Income from income tax, national insurance, capital gains tax and VAT, among others, were all on the rise, but additional analysis by Hargreaves Lansdown showed that the payments stamp duties recorded particularly significant peaks. In England, taxpayers paid Â£ 10.2 billion in stamp duty, up to Â£ 4.1 billion in one year.
Sarah Coles, Personal Finance Analyst at Hargreaves Lansdown, commented: âThe huge increase in stamp duty this tax year demonstrates the impact of the stamp duty exemption. twist theirs.
âTaxes rose by a third in the first half of the fiscal year and stamp duties rose by two thirds. And while the numbers are hugely skewed by the impact of the pandemic, the dramatic impact of the stamp duty suspension is clear.
“It’s hard to compare tax years because the government introduced a set of rules to try to make it easier to manage tax bills, and another to get us to spend more money and buy more money. properties.
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“However, we can see the huge impact of the stamp duty holiday. It has pushed the average house price to a record high of Â£ 270,000 – up Â£ 28,000 in one year, and has resulted in higher prices. This year we had the busiest September ever in the real estate market, as buyers rushed for the latest stamp duty holiday deadline.
âIn terms of stimulating the market and generating taxes, the movement has been clearly effective. However, if you try to access or climb the property ladder, the impact will likely be much less welcome. dies, buyers have nothing more to gain from the short-term measure, and in the process, this has made the challenge of buying a home even more difficult.
In the coming months, HMRC may also devote even more resources to tax collection. Recently, the National Audit Office released a report on how HMRC handled tax debt during the pandemic.
Summarizing the report, the National Audit Office said: âAt the onset of the first foreclosure, HMRC acted swiftly, suspending debt collection to reduce pressure on debtors and working to improve its understanding of how the pandemic was affecting taxpayers.
He then launched his Return to Collection campaign and made it easier for taxpayers to pay off their debts online. Early indications were encouraging, with taxpayers paying off their debts faster than expected and stakeholders hailing HMRC’s understanding tone. However, HMRC also predicts that higher levels of tax debt will persist.
âHMRC faces several years of dealing with the impact of the pandemic on tax debt and the current staff is unlikely to be sufficient to handle the increased workload. more debt. He believes that adding private sector staff and capacity would be most successful in increasing debt collection. “
Dawn Register, Head of Tax Litigation Resolution at BDO, commented on this report.
“With many COVID-19 support measures now withdrawn, the focus is likely to be on collecting unpaid taxes whether or not the HMRC remains understaffed,” she said.
âA lack of resources could even lead to more punitive action in the event of non-compliance, as HMRC will be under pressure to resolve situations quickly.
âThe government is investing Â£ 100million in HMRC to form its Taxpayer Protection Task Force to tackle around Â£ 5.2bn of pandemic support fraud, but the current tax debt of 42 billion pounds eclipses that figure, and it must be worth investing more in HMRC debt. management service to collect this. In my experience, better service from the HMRC debt team helps struggling businesses and individuals pay off more and faster, so it must be a good investment for the government in the long run. “
Ms Register concluded by urging taxpayers to act where they can.
âThe NOA report recognizes that the tax debts related to the pandemic will be unpaid for years and it is essential that the government and HMRC accept that this is a long-term problem,â she said.
âTragic cases related to taxes owed for disguised payroll loan charges have led HMRC to authorize five-year tax debt payment plans and a similar approach will be needed with pandemic-related tax debts.
âIf HMRC allows much longer ‘payback’ arrangements for pandemic-related tax debts, many fewer individuals and businesses will be forced into bankruptcy and the government will start paying off tax debts. Monthly or quarterly installment plans are generally useful and practical for both sides.
âTaxpayers with overdue tax bills shouldn’t put their heads in the sand – if they haven’t received enforcement requests, they probably will soon, which if they don’t is not treated appropriately, will cause even more difficult times to come. “