By Legal Futures Associate Finders International [1]
Inheritance tax was among the few revenue-generating taxes that rose in 2020/21, thanks to the Covid-19 pandemic.
The tax rose to more than £5.3 billion, close to the peak of 2018/19, when it reached £5.4 billion, though it dropped again shortly afterwards because of the rise in the residence nil rate band and perhaps because people had rushed through probate in the previous tax year because they were concerned that higher probate fees might be coming.
According to the national statistics released in April of this year [2], Her Majesty’s Revenues and Customs (HMRC) collected £584.3 billion in taxes in 2020 to 2021, a decrease of 7.8 percent from the year before.
60 percent of annual receipts
During 2020 to 2021, receipts from Income Tax (IT), Capital Gains Tax (CGT), NICs and the Apprenticeship Levy (AL) combined accounted for 60 percent of the annual receipts. Over the last decade, IT, CGT, NICs and AL made up on average 55 percent of total annual receipts with VAT and Corporation Tax the next largest contributors, contributing an average 21 percent and 9 percent of total receipts respectively.
The Covid-19 pandemic and the government policies it triggered had significant impacts which were visible in receipts collected across a number of taxes, the full effects of which will continue for some time.
While the closure of pubs, hotels and restaurants resulted in a fall in beer and cider duty, overall alcohol receipts increased from £11.8 billion in 2019-2020, to £12,1 billion in 2020-21, which may be attributed to people drinking more wine and spirits in the home.
Significant fall in air passenger duty
Unsurprisingly, there was a significant fall in Air Passenger Duty Receipts. Over the last 20 years, receipts have risen from £0.8 billion in 2001 to 2002 to £3.6 billion in 2019 to 2020. Receipts in 2020 to 2021 fell significantly to £0.6 billion reflecting the huge impact of the pandemic on the aviation sector and a fall in passenger flights.
With Inheritance Tax Receipts, the increase is likely in part because of the higher number of wealth transfers that took place during this tax year, this in turn the result of higher-than-usual deaths due to Covid-19. While the receipts increased in 2020 to 2021 compared to the previous year (although they remain below their 2018 to 2019 peak), the higher Covid-19 related deaths outweighed the effect of lockdowns reducing deaths from other causes, particularly from flu and other respiratory diseases (although the HMRC can’t verify this effect on wealth transfers until full administrative data becomes available).
Finders International [3] trace missing beneficiaries to estates, properties and assets. To see a full list of our services [4], please visit our website [3]. Alternatively, you can contact us via telephone +44(0) 20 7490 4935 or email contact@findersinternational.co.uk [5]