Inheritance taxes fell to £ 5.3bn in 2020-2021, near their 2018/19 peak of £ 5.4bn, which is likely due to the higher death rate.
However, it has declined in the past year due to the rise in the zero rate bracket for residency, and possibly because people had rushed the previous year over concerns about fees. higher homologation en route.
The inheritance tax received a lot of negative media press, with the tax being described as “ complex and confusing ” and in need of a complete overhaul. Executors and administrators should understand the importance of this tax regime and the implications and impact it could have when it comes to the estate of a deceased person.
Covid-19 has plucked the pockets of the tax authorities in other areas with a tax cut for the first time since the 2008-2010 financial crisis.
In 2020/21, tax revenue was down 7.8% or £ 49.1bn from the previous year to £ 584.3bn. Income tax and capital gains tax rose much slower than expected, while VAT, stamp duty and fuel duty all fell. Alcohol and inheritance taxes have turned the tide.
Stamp duties fell for the third year in a row, in part thanks to relief for first-time buyers. However, it peaked at the end of the year: March saw a record stamp duty – the highest monthly revenue since the tax was introduced in 2003, as people scrambled for the date. initial limit of the stamp duty holiday.
HMRC released tax collection statistics for March and for the 2020/21 tax year here.
Commenting on the stats, Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown said:
“……… With an economy closed for much of the year and tax breaks rushed by the Chancellor to help get the country back on its feet, the Treasury collected almost £ 50 billion in tax less.
“Job losses, lower wages and time off have resulted in lower income taxes, while less overall spending has reduced VAT, and travel restrictions have killed rights on fuel and passengers. aerial.
“The stamp duty has been on a roller coaster ride, dropping to a very low level when the housing market closed during the first foreclosure, then rising to an all time high as people rushed to buy before the deadline. stamp duty holiday. Overall, however, it was on the decline.
“A few taxes have defied the trend. Our commitment to wine o’clock and the gin trend has maintained the alcohol levy, despite a drop in the consumption of pub pints. And the higher number of deaths during the year means more estates pay inheritance tax.
“But while people who may have spent less during the crisis will have felt the benefit of lower spending taxes, we are all likely to feel the impact of the flip side.
“The Treasury is shaken by lower taxes at a time of record spending. This means that once the worst economic effects of the crisis have passed, the government will want to fill its coffers again, and the threat of higher taxes and lower spending is growing.
It pays to stay one step ahead of any fiscal hardships the government plans to have and to think about protecting yourself against overspending. If you haven’t yet taken advantage of this year’s ISA allowance and are considering making the most of your annual pension contributions, it’s worth doing while you still can. “