Inheritance tax ‘no longer just for the rich’ as more families face six-figure death duty

Inheritance tax is “no longer just for the rich”, experts have warned, as increasing numbers of Britons face six-figure bills.

The Treasury brought in £2.4bn in inheritance tax receipts in the three months to July, £300m higher than the figure for the same period last year.

The standard inheritance tax rate is 40 per cent, which is only charged on the portion of an estate that is above the tax-free threshold of £325,000.

The value of an estate includes the property, money and possessions of someone who has died.

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If the value of an estate is below £325,000, there is normally no inheritance tax to pay. It is also possible to bypass the tax by leaving everything above the £325,000 threshold to a spouse, a civil partner, a charity or a community amateur sports club.

The threshold has stayed the same since April 2011, but property prices have soared, meaning increasing numbers of people are paying more tax when they die, the Express reported.

The average cost of a property rose by £140,129 between April 2019 and June 2022. This means that it is not just millionaires who are having to stump up money in inheritance tax, but also many middle-class families who have seen the value of their properties rise, experts told the paper.

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Myron Jobson, senior personal finance analyst at Interactive Investor, told the Express: “The bumper tax haul demonstrates that inflation – both wages and house prices – is feeding through into the HMRC coffers. This may leave a sour taste at a time people can’t afford energy bills.”

Shaun Moore, of wealth management firm Quilter, said: “No longer is IHT [inheritance tax] the preserve of the rich. Many estates are having to pay the tax simply because of their property wealth. Inheritance tax is proving to be more and more lucrative for the Treasury.”