New research by peer-to-peer real estate investment platform, easyMoney, reveals that the total amount of inheritance tax paid to HMRC is on course to hit a record high during the 2023/24 financial year, having already done so in 2022/23 with a massive 17.1% annual increase.

easyMoney has analysed the level of inheritance tax paid to HMRC in each financial year since 2003/04, and how this relates to the overall tax receipt money being collected by HMRC.

The data shows that in 2022/23, the total amount of inheritance tax paid increased by 17.1%, the second largest annual rise for the last 20 years, trumped only by a 22.2% increase recorded in 2015/16.

This annual increase means that HMRC received north of £7 billion in inheritance tax in 2022/23, which, at more than £1 billion more than the previous year, is the largest UK inheritance tax collection ever recorded and equivalent to 0.9% of that year’s overall tax payments.

Over the first four months of the current financial year, 2023/24, HMRC has collected £2.6 billion in inheritance tax.

If tax collection continues at this rate, easyMoney forecasts that this year’s total inheritance tax bill for the people of the UK will reach £7.8 billion, breaking all previous records.

This will mark a 10% increase since 2022/23, and will make up 1% of HMRC’s entire tax receipts for the year.

Jason Ferrando, CEO of easyMoney says:

“People are working harder than ever, earning less and less in real terms, and now we learn they’re also paying more inheritance tax than ever before. They get you while you’re living, and then get you when you’re dead, it seems.

A rise in inheritance tax normally means one of two things – either more people have died, as was the sad case during the worst of the pandemic years, or people are leaving behind more money than they did before.

To this latter point we can look at the rapid increase in house prices and understand why inheritance taxes are on the rise – the more valuable your legacy, the more tax will be charged.

It’s understandable that some people feel frustrated by this form of taxation, and there are ways to minimise how much can be taken when you die. Living inheritance, money you pass down before you pass on, is the most popular way of reducing the death tax. This can be achieved through equity release, gifting, creating a trust, or even political and charitable donations.

Anyone who is keen to maximise the amount they are able to leave to their loved ones instead of HMRC should appoint a financial advisor or solicitor who will be able to talk you through all of your various options.”