Monetary specialists warned that the tax is not only for the ‘mega rich’.
Britain’s most hated tax wrings £100m extra out of bereaved households (Picture: Getty)
Britain’s most hated tax has leeched £100million extra out of bereaved households within the final 12 months as tax thresholds stay frozen. Specialists warned that inheritance tax is not reserved for the “mega rich” after the Authorities revealed it earned £7.7billion from the demise responsibility between April 2025 and February this 12 months, £100million larger than the identical interval final 12 months.
Many grieving households have been dragged into paying the invoice in recent times as a result of the tax-free nil-rate threshold of £325,000 has been frozen since 2009, whereas property comparable to property costs have surged in worth. Chancellor Rachel Reeves confirmed within the Autumn Funds that thresholds would stay frozen till April 2031, that means they’ll have stayed unchanged for 22 years, triggering widespread backlash.
Rachel Reeves froze inheritance tax thresholds till 2031 (Picture: Getty)
Ian Dyall, head of property planning at wealth administration agency Evelyn Companions, stated the figures reiterated that IHT was “not a marginal concern affecting solely the very wealthiest”.
“The growth of IHT just isn’t a results of sudden shifts in wealth, however moderately years of fiscal drag. Nil charge bands have been frozen for a few years whereas asset values, notably property, have continued to inflate.”
Brits need to pay the Authorities 40% of any property handed on by family members above the £325,000 threshold, which will increase to £500,000 if the house is handed on to kids, that means households could need to promote their properties to afford the tax invoice.
Mr Dyall warned that when the Authorities drags unspent pension funds into IHT calculations from April 2027, much more shall be pulled into the web.
He stated this modification, first introduced within the 2024 Autumn Funds, would place “further stress on beneficiaries who could not take into account themselves prosperous”.
Farmers staunchly opposed the tax-free cap proposed by Labour (Picture: Getty)
Shaun Moore, tax and monetary planning skilled at Quilter, added that the upcoming change to farming inheritance tax would “start to shift the system”.
Labour introduced that it could reverse its resolution to cap agricultural and enterprise property reliefs at £1million from April, after sustained stress from farmers who stated it could jeopardise the business and threaten UK meals manufacturing, since costly farming tools simply pushes them over the brink. Reeves confirmed it could rise to £2.5million, or £5million for {couples}.
However Mr Moore stated that even with April’s reforms, “the route is tightening”. He warned: “IHT is actually not a tax aimed solely on the mega rich.”
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The treasury acknowledged that the upper receipts have been “anticipated” from March 2022 as a result of a mixture of the frozen threshold and rising asset values, and a better quantity of wealth transfers following latest liable deaths, in its month-to-month tax receipts replace on March 20.
It partially attributed larger receipts between June 2022 and December 2025 to a “small quantity” of higher-value funds than ordinary.
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