Inheritance tax rises once more, causing outrage as more bereaved families are dragged into the dreaded ‘horrid tax.’
CAMPAIGNERS have reacted angrily to the news that inheritance tax receipts have increased by 20% in a year, resulting in Britons paying £600,000 more than they did a year ago.
Experts warn that inheritance tax (IHT) increases are only the beginning, and Britons should start planning now to avoid handing over more of their wealth to HM Revenue and Customs (HMRC).
Between April and October this year, IHT receipts totaled £3.6 billion, up from £3 billion the year before.
Following Chancellor Rishi Sunak’s decision in the March Budget to freeze the inheritance tax threshold for five years, they are expected to rise even further.
As house prices and stock markets rise, more middle-income families will be drawn into the net.
Duncan Simpson, the research director of the Taxpayers’ Alliance, slammed the “death tax.”
“Having to cough up a large IHT bill is a terrible thing for bereaved relatives to have to deal with, especially as more bereaved families are dragged into this unpopular and unfair tax.”
Many people, he said, want IHT to be phased out entirely.
“At the very least, the thresholds should be raised to £1 million in order to protect more taxpayers from these dreadful bills.”
In the context of the Covid pandemic, Myron Jobson, a personal finance campaigner at interactive investor, said the increased IHT take felt “unsavory.”
Mr Sunak’s decision to freeze the £325,000 IHT nil-rate threshold and the main residence nil-rate band for home at £175,000 until the 202526 tax year has been slammed by him.
“Increasingly, IHT feels like a raid on hardworking families, rather than the ultra-wealthy it was intended for.”
Many people, according to Mr Jobson, believe inheritance tax is unfair because they are effectively taxed twice on the same earnings.
The figures show how easy it is to generate a potentially large inheritance tax bill on death, according to Andrew Aldridge, partner at Deepbridge Capital.
The Treasury will welcome the increased IHT revenues to cover the extensive spending commitments Sunak announced last month, according to Ami Jack, head of national tax at Smith and Williamson.
To reduce their IHT exposure, he advised families to invest tax-efficiently and make gifts, and warned that IHT could rise again.
Many expected Mr Sunak to announce more tax hikes in his Autumn Budget, but Andrew Gillett, head of wealth management advice at BRI Wealth Management, warned that this could only be a temporary reprieve.
“More families will be required to pay.”
“Brinkwire News in Condensed Form.”