The taxman is targeting a growing number of grieving families each year as 3,700 more estates have been snared into paying inheritance tax. The number of deaths subjected to inheritance tax (IHT) has increased by 13% in just one year, figures released on Thursday have revealed.
Some 31,500 estates paid the levy in 2022-23, a 13% rise on the 27,800 estates which paid the tax in 2021-22.
Chancellor Rachel Reeves will rake in more money from inheritance tax raids (Image: Getty)
These statistics relate to a period before the reduction in business property relief and agricultural property relief, and also before changes that mean that pension pots will now be subjected to inheritance tax.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Frozen inheritance tax thresholds and rising house prices are dragging more and more grieving families into paying the hated death duty.
“Yet in the ultimate sign that the government views wealth and affluence with contempt and envy, the only changes they have made have been to hammer family businesses and farms.
“Whoever makes up the next government should scrap inheritance tax in its entirety.”
The figures, released by HM Revenue and Customs (HMRC), showed 4.62% of UK deaths resulted in an IHT charge, increasing by 0.23 percentage points from the tax year 2021 to 2022.
IHT tax liabilities in 2022-23 were £6.70 billion, a rise of £0.71bn (12%) compared to the previous year.
Ian Dyall, head of estate planning at leading UK wealth management firm Evelyn Partners, said: “This data really just confirms what we already know: that more families are incurring inheritance tax liabilities, and more assets in each estate are becoming subject to tax – even before the IHT measures announced at the last Budget take effect.
“As asset prices, especially equities and property, continue to rise the frozen nil-rate bands offer less and less protection against IHT and families that take no steps to mitigate their liabilities will either get drawn into the scope of IHT or have the tax levied on a greater proportion of their assets.”
The Office for Budget Responsibility (OBR) forecasts total IHT liabilities for 2024/25 will rise 11.6% on the previous year to £8.4 billion, while receipts data shows HMRC has so far taken £8.2billion for that period.
The OBR also forecasts that in the current 2025/26 tax year IHT will raise £9.1 billion.
HM Treasury spokesman said: “Nine in 10 estates will continue to pay no inheritance tax by 2030, and the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1 million when a tax free allowance is passed to a surviving spouse or civil partner.
“The tough but necessary decisions we’ve taken on tax mean we could protect working people’s payslips from higher taxes, invest record amounts into the NHS, defence and other public services while keeping bus fares at £3 and expanding free school meals.”
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Keir Starmer ‘faces losing his seat’ to Jeremy Corbyn-led party as Gaza fury continues
Keir Starmer Says UK will recognise Palestinian state (Image: Getty)
Keir Starmer could lose his seat to a left-wing candidate backed by Jeremy Corbyn, Labour insiders fear. The Prime Minister could find himself kicked out of Parliament at the next general election, according to insiders. He is one of three Cabinet Ministers under threat from independent candidates or candidates from a new party to be led by Jeremy Corbyn, the former Labour leader, and Zarah Sultana, the left-wing MP who quit Labour earlier this month.
The others are Health Secretary Wes Streeting and Justice Secretary Shabana Mahmood. Anger over Gaza is set to drive support for left-wing alternatives to Labour. But other issues that have damaged Sir Keir’s standing include plans to remove benefits from some people with disabilities, which have now been abandoned in an embarrassing u-turn.
There is also a general feeling among some voters in big cities that Labour has taken them for granted for too long, according to experts.
Magazine the New Statesman reports one Labour insider said: “It is not inconceivable that Keir, Wes and Shabana could all lose their seats”.
And the senior Labour figure warned the party faces a “worst-of-all-worlds scenario” at next year’s elections, as it comes under threat from both left-wing alternatives and Reform.
A “pro-Gaza” independent candidate, Andrew Feinstein, came second in Sir Keir’s constituency of Holborn and St Pancras in last year’s general election, although the Prime Minister held his seat with a comfortable majority of 11,572.
But recent disturbing images from Gaza have made the war an even bigger issue for Israel’s critics.
A particular threat to Labour will come if left-wing independent candidates, the Green Party and a new Corbyn-led party either join forces or come to an agreement which means they do not stand against each other in seats where one has a chance of winning.
Sir Keir announced on Tuesday the UK could take the step of recognising statehood in September, ahead of a major UN gathering.
The UK will only refrain from doing so if Israel allows more aid into Gaza, stops annexing land in the West Bank, agrees to a ceasefire, and signs up to a long-term peace process over the next two months.
The move has been criticised by Israeli Prime Minister Benjamin Netanyahu, who claimed it “rewards Hamas’s monstrous terrorism”.
In a statement from Downing Street on Tuesday after an emergency Cabinet meeting on Gaza, Sir Keir said the UK’s “message to the terrorists of Hamas is unchanged but unequivocal: they must immediately release all of the hostages, sign up to a ceasefire, disarm, and accept that they will play no part in the government of Gaza”.
Asked directly whether the release of hostages by Hamas is an explicit condition of Palestinian recognition, Transport Secretary Heidi Alexander told Radio 4: “We will be making an assessment in September and we expect Hamas to act in the same way as we expect Israel to act.”
She later added: “We’re giving Israel eight weeks to act. If they want to be sat at the table to shape that enduring peace in the region, they must act.”
Asked whether it is gesture politics and a case of Sir Keir changing his mind over an issue after pressure from his backbenches, the Transport Secretary said: “I’m sorry, that’s just not true.
“This is about the Palestinian people. It’s about getting aid in to those starving children.”
Sir Keir had been coming under pressure from MPs to recognise statehood, and last week more than 250 cross-party members signed a letter calling on him to act.
Among the signatories was Dame Emily Thornberry, a Labour MP and chairwoman of the Foreign Affairs Select Committee.
She described Sir Keir’s statement as “great news” and denied the suggestion that Britain is “irrelevant”, telling the BBC Mr Netanyahu “completely lost it” overnight in the wake of the Prime Minister’s comments.
