The controversial “tax on the dead” has handed the taxman £300million greater than it did at the identical time last yr. Finance experts say the cash grab will pile more pressure on middle-class families at a time of crippling living costs.
They blame the trend on the Government freezing thresholds at which tax have to be paid on an individual’s estate.
Alex Davies, founding father of investment advisers the Wealth Club, said property price rises mean more people die leaving legacies above the limit. His team found HM Revenue & Customs took inheritance tax of £1.8bn within the three months to the tip of June – up £300million on the identical quarter 2021.
“This increase is being fuelled by soaring house prices and years of frozen allowances which at the moment are being decimated further by rampant inflation.
“It is probably going the estates of many individuals with more regular incomes and average value homes, will find yourself getting caught out by this most hated of taxes. “Furthermore, with the federal government purse under pressure from all angles there’s unlikely to be any respite from this soon.”
Danielle Boxall, media campaign manager on the TaxPayers’ Alliance, said: “Taxpayers facing the price of living crisis are battling the increasing burden of inheritance tax.
“Not only does the low threshold mean the levy hits the savings of hard-working households, but coughing up for an enormous tax bill is the final thing grieving families wish to take care of.
“The Government should abolish the tax entirely and show a more compassionate attitude towards the bereaved.”
The fundamental threshold above which beneficiaries must pay tax on what they’re left is £325,000 – at a normal rate of 40 percent. They may find a way to inherit a house or flat without paying, through a “residence nil rate band” of as much as £175,000.
The fundamental tax threshold was frozen in 2009 and each it and the residence nil rate won’t be altered until no less than 2026. But Mr Davies said overall inflation over the past 13 years is 45 percent, while houses have increased in price by 67 percent.
Research earlier this yr suggests the disparity left bereaved relatives £154,000 worse off than when the brink was frozen. The Office for Budget Responsibility predicted that the Treasury would earn a record £6.7 billion from inheritance tax this yr and next yr.
Amy Pethers, of wealth manager Brewin Dolphin, said on the time: “Even those that don’t regard themselves as overly wealthy may find that their estates fall inside this band.”
Rob Morgan, of investment service Charles Stanley, said: “It will not be unusual for an Inheritance Tax bill to be several hundred thousand kilos.
“Families could struggle to pay large bills and, subsequently, be forced to make some difficult decisions – akin to selling a family home.”