Taxpayers are slamming inheritance tax (IHT) as “unfair” following the revelation that 50,000 Britons are being forced to pay the levy.
A recent report, obtained by the Telegraph, has revealed the number of people being dragged into the IHT threshold is four times more than previously forecast.
Chancellor Jeremy Hunt made the decision to freeze the inheritance tax threshold at £325,000 until April 2028.
Previously, it was estimated that this move would pull 13,400 estates into the levy’s purview but higher-than-expected inflation has seen this figure rise to almost 50,000.
In a recent survey carried out by Ipsos, IHT was ranked as the most “unfair” tax currently in the UK.
Some 43 percent of respondents agreed the levy was “unfair” to taxpayers, compared to 23 percent and 17 percent who believed it was fair.
Other levies which are considered “unfair” by a plurality of Britons include council tax and fuel duty.
This particular tax is imposed on someone’s estate, which includes their property and possessions, after they have passed away.
No inheritance tax is paid if the person who had died away leaves everything above the allowance to their spouse, civil partner, a charity or a community amateur sports club.
An estimated 280,000 families across the country are expected to pay more in IHT bills by the end of Hunt’s tax threshold freeze.
Inheritance tax is usually not paid by taxpayers if the value of the deceased’s estate is under the £325,000 allowance.
However, a standard tax rate of 40 percent is applied to anything that is above this particular threshold.
Usually, IHT thresholds rise in line with inflation but the current allowance remains the same as it did in 2021.
With the inheritance tax threshold remaining the same, rising house prices and asset growth mean that more and more households are having to deal with this tax more than before.
Ian Dyall, the head of Estate Planning at wealth management firm Evelyn Partners, cited the public outrage over IHT potentially being a political hot potato next year.
He explained: “Inheritance tax has grabbed some headlines recently with the possibility that it will become a policy issue at the next General Election.
“Given the steadily rising tide of IHT receipts taken by the Treasury, driven in large part by frozen nil-rate band thresholds and rising asset prices, it’s perhaps not surprising that this already unpopular tax is now widely regarded as another ‘stealth tax’.”
