Rampant inflation and frozen allowances mean more people will be hit with death duties
Families will pay out a record amount of inheritance tax to the Treasury, official figures have revealed.
Bereaved relatives paid £5.3bn in death duties between April and December 2022, which is £700m more than the same period a year before, according to HM Revenue and Customs.
Families paid £545m in December alone, up from £474m in the same month the previous year.
IHT revenue for 2021-22 is on track to surpass the record £6.1bn raised in 2020-21 once the data for the remaining months of the tax year is collected.
IHT is charged at 40pc on the portion of a taxpayer’s estate worth more than the tax-free allowance of £325,000.
Chancellor Jeremy Hunt announced an extended freeze to thresholds in last year’s Autumn Statement, which means the allowance will remain stuck at £325,000 until 2027-28, even as inflation pushes more estates above the limit.
The Office for Budget Responsibility has forecast that IHT receipts will soar to £7.8bn in 2027-28 as a result.
On average families that must pay IHT face a bill worth £216,000, based on data from 2019-20. But research by Wealth Club, a specialist IHT adviser, shows the average bill could climb to £345,084 by 2027-28.
Alex Davies, of the firm, said: “Rampant inflation and years of frozen allowances and soaring house prices mean many more families will find themselves hit with a hefty inheritance tax bill which they might not have envisaged or planned for.”
READ ON BELOW…Inheritance tax threshold – bereaved families pay record amounts