Treasury coffers are full to brimming with cash from surging inheritance and capital gains taxes.
HM Revenue and Customs has flagged that inheritance tax raised £5.3 billion last year – and this could rise another £1.2 billion by April 2018.
While capital gains tax is on track to rake in £8.8 billion by the end of the tax year.
The CGT take is expected to increase 5% to £13.3 billion a year by April 2023.
Families pay inheritance tax when the value of the estates of deceased relatives are more than the rules allow.
CGT is paid on gains in the value of assets, such as stocks and shares, second homes and buy to let homes.
Sean McCann, chartered financial planner at NFU Mutual, said: “It’s clear that the taxman is cracking down hard on inheritance tax by looking more closely at people’s estates and challenging claims for reliefs. You’d expect the introduction of the Residence Nil Rate Band would see receipts flatten out or even fall a little bit, but the opposite is happening.
“When inheritance tax receipts rise, it’s usually because of a buoyant housing market. But property prices aren’t rocketing in the same way, so it’s difficult to see what could have caused such a sharp increase in receipts other than a more aggressive approach to inheritance tax.
“The extra scrutiny from tax officials means those who haven’t taken professional advice or planned early could be caught out. This could have a catastrophic effect on family wealth.
CGT takes a bite out of gains
“IHT is one of the more complex taxes and there are plenty of traps to fall foul of – as many families appear be finding out.”
He explained that HMRC is also looking closer at property sales and ownership to find out if the owners should have paid CGT on the disposal.
“Many thousands of people who have just filled out their tax return will be acutely aware that CGT can take a big bite out of any gains,” said McCann.
“Some of our customers are working in partnership with their spouse to reduce their combined tax bills, taking full advantage of everyone’s CGT allowance of £11,300 by transferring shares and property between them. However, we’ve been warning our customers to watch out for potential tax traps. Transferring property between spouses could trigger a stamp duty charge.”