The tragic loss of life caused by the pandemic pushed inheritance tax receipts to £561m July, the highest month ever recorded.
Inheritance tax of 40% is paid above the tax-free threshold of £325,000.
There’s typically a delay of up to six months between someone dying and when the tax is paid. Indeed, what we’re seeing now is a result of the tragically high death rate in early 2021.
HMRC said it’s to early to say whether the higher death rate and higher tax take are linked, but given that the last peak in inheritance tax was in October, six months after the first wave, Hargreaves Lansdown said there’s likely to be a link.
Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “The pandemic has pushed inheritance tax… to record highs in July.
“The horrible rise in deaths from coronavirus at the beginning of this year meant an increase in IHT as those estates finally made their way through probate.”
When planning for the future Hargreaves Lansdown recommended for people to utilise the annual gift allowance – this enables you to gift an amount without it being taxed, as long as you live for seven years afterwards.
Stamp duty receipts also hit a record level in July due to the impact of the relief, as the minimum threshold moved from £500,000 to £250,000 at the end of June.
You have 14 days to pay stamp duty after completion, which is why so many receipts were held over to July.
The government received £1.309bn from stamp duty purchases in July, the highest month on record.
In June 213,120 buyers raced to complete before the deadline.
Coles added: “The Treasury’s efforts to reinvigorate the property market after lockdown with a stamp duty holiday encouraged thousands of people to accelerate their house-buying plans, pushing stamp duty on property to record highs.”