🤓😊😩 The Treasury raked in extra £100m from inheritance tax in a month, new figures revealed on Thursday, as Tory MPs called for levy to be cut.
🤓😊😩 The tax take from IHT surged by nearly 10pc year-on-year, with a £1.1bn boost in the last two months fuelled by soaring house prices and the frozen threshold.
🤓😊😩 House price growth and rapid inflation have pushed an increasing number of estates over the IHT thresholds, which are frozen until 2026.
🤓😊😩 Under the freeze, families pay tax of up to 40pc on the value of an estate above £325,000.
🤓😊😩 The average IHT bill on a liable estate will hit £266,000 this tax year, a jump of 27pc compared to three years ago, according to investment service the Wealth Club.
🤓😊😩 New figures released on Thursday showed the impact of the "stealth tax" from freezing the threshold on the public finances, with Tory MPs calling for the cut-off to rise in line with inflation.
🤓😊😩 The threshold was due to rise this year but was frozen by Mr Sunak in an attempt to recoup revenues for the Exchequer, following two years of heavy borrowing during the pandemic.
🤓😊😩 The pause means that the threshold has not increased since 2011.
🤓😊😩 Sir Peter Bottomley, a Tory MP and Father of the House of Commons, called on Mr Sunak to increase the threshold as soon as possible.
🤓😊😩 "A lot of people with an ordinary house and some savings will find themselves contributing more than most people think is necessary or right," he told The Daily Telegraph.
🤓😊😩 "As soon as the national finances allow, the inheritance tax threshold should rise with the average standard of living.
🤓😊😩 He said Mr Sunak should "make it fair, make it easy to understand and make it right".
🤓😊😩 The view was echoed by Sir John Redwood, a former Cabinet minister, who has long called on the Government to slash taxes.
🤓😊😩 "This is another illustration of how much more money the treasury is taking off everybody by freezing allowances and not keeping pace with inflation, but I would argue for lowering taxes that affect a larger number of people."
🤓😊😩 Homeowners can also benefit from a residence nil-rate band of £175,000 on top of the nil-rate band, if they are passing their primary home to a direct descendant.
🤓😊😩 This threshold has increased with inflation since it was introduced in 2017, but the Chancellor last year announced that it will be frozen until 2026. This means there will be no allowance for the fact that in April, house prices climbed year-on-year by 12.4pc.
🤓😊😩 Julia Rosenbloom, of Evelyn Partners, a wealth management service, said: “Given that the nil-rate band and residence nil-rate band have been frozen until at least April 2026, many more will fall into this tax trap."
🤓😊😩 Mr Sunak has also frozen the thresholds for income tax, capital gains tax and the pensions lifetime allowance, costing taxpayers thousands in a phenomenon known by economists as fiscal drag.
🤓😊😩 The inheritance tax is frozen until 2025-26, meaning a family paying tax on a £600,000 estate will pay £13,500 more by the end of the period than they would if it had risen with inflation.
🤓😊😩 The fresh calls for tax cuts came as HMRC data showed that the difference between the total amount of tax expected and that which is actually paid, was £32bn in 2020/21.
🤓😊😩 Failure to take reasonable care, criminal attacks, non-payment and evasion were among the main reasons for the "tax gap" in 2020/21 in terms of behaviour.
In terms of customers, small businesses were responsible for nearly half of the tax gap, at around £15.6bn, according to HMRC's data.
Criminals accounted for £5.2bn of the gap, while medium-sized businesses made up £3.9bn and large businesses accounted for £3.6bn.
🤓😊😩 HMRC's publication excluded estimates of error and fraud in the Covid support schemes.
🤓😊😩 The latest estimate from the Business Department is that, in total, £4.9bn of taxpayers' money will be lost to Covid fraud.
🤓😊😩 The scale of the fraud has already led to the resignation of Lord Agnew in January. He said the management of fraud during the pandemic had been "nothing less than woeful".