Pensioners slam the ‘most unfair tax in Britain’ as HMRC rakes in billions

The levy is charged at 40 per cent on someone’s estate which is worth more than £325,000, including their money, possessions and property, once they pass away.

Figures from HMRC show that IHT receipts for April 2023 to March 2024 hit £7.5billion which represents a £400,000 annual rise.

Wealthier Britons are calling for an overhaul to inheritance tax, based on a new poll from wealth managers Saltus.

According to the fifth edition of the Saltus Wealth Index, Britons believe the levy is “unfair” in its current form.

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This comes after the decision by Chancellor Jeremy Hunt to freeze the IHT rate until at least April 2026.

As such, many households are concerned about being pulled across the tax threshold due to the impact of fiscal drag.

The twice yearly survey of 2,000 Brits with investable assets of over £250,000 found that just four per cent of respondents think the current rate of IHT is fair.

Some 90 per cent believe it should be halved to 20 per cent, while six per cent of those polled think the tax should be scrapped altogether.

Notably, 48 per cent of retired respondents consider inheritance tax to be “the most unfair tax in Britain”.

Megan Jenkins, a partner at Saltus, shared what the firm’s recent poll reveals about the public’s stance on inheritance tax.

She explained: “Our report shows that, while the majority of high-net-worth individuals (HNWI) accept IHT as a legitimate form of taxation, they think it is too high at the current level.

“There are already many options for people who want to pass on their wealth as efficiently as possible.

“These include gifting and giving away cash during their lifetimes – and our report shows around three quarters of HNWIs are currently financially supporting their families through the cost-of-living crisis – as well as trust funds, charitable giving and funeral plans.”

The tax expert warned that thousands of families are falling foul of “one of the biggest mistakes” when it comes to IHT.

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Jenkins added: “Mitigating IHT is high on many people’s financial objectives, and while there are many ways to reduce IHT liability, they must be done right.

“Any mistakes can not only impact the effectiveness of any tax planning, but potentially leave the estate open to an unexpected IHT bill.

“One of the biggest mistakes people make is not being aware of the IHT thresholds.

“We find many people are worrying about an IHT problem they don’t have, while others are not aware of one they do.”