Is the Treasury Profiting from Grief? How Are Near-Record Inheritance Taxes Raking in £749 Million in a Single Month?H
Grieving families handed over £2.8billion in inheritance tax in the first four months of the tax year with growing numbers being dragged into the net.
The Treasury raked in an extra 9 per cent — or £230million — between April and July compared with the same period last year, official figures have revealed.
The dreaded 40 per cent death duty raised £749million in July — the second highest month on record.
Thousands of middle-class households who have lost their loved ones have been forced to pay inheritance tax as the threshold at which you must begin to pay it has been frozen until at least April 2028.
This means that, as property prices and asset values increase, more families are being dragged into paying the duty in a process known as fiscal drag.
Chancellor of the Exchequer Rachel Reeves gives a speech at the Treasury in London on July 8
The Treasury raked in an extra 9 per cent — or £230million — between April and July compared with the same period last year, official figures have revealed
The first £325,000 of inheritances are tax free, but above this they are taxed at 40 per cent.
This threshold has not increased since 2009. There is an additional allowance of £175,000 when the family home is left to ‘direct descendants’ such as children or grandchildren.
This has also been pegged until 2028.
Across all taxes, HMRC collected a total of £82.5billion last month — the highest receipts ever for the month of July, according to Joe Neal of tax firm Blick Rothenberg.
But the increase in inheritance receipts has reignited rumours that Britian’s most hated tax could be hiked as Chancellor Rachel Reeves tries to plug a claimed £22billion ‘black hole’ in public finances.
Stephen Lowe, of retirement specialist Just Group, said: ‘With the Autumn Statement in two months’ time, it seems inevitable that the Chancellor will at the very least run her slide rule over inheritance tax to see if it’s a way to raise more revenue.
‘We will have to wait and see if Rachel Reeves decides that inheritance tax can work even harder for the Treasury.’
The UK Treasury is facing scrutiny as it collects near-record levels of inheritance tax, raising concerns about the financial burden placed on grieving families. In just one month, inheritance tax revenues reached an astounding £749 million, sparking a debate over whether the current tax system is taking advantage of those who have recently lost loved ones.
Critics argue that the rising inheritance tax, which has been steadily increasing due to frozen tax thresholds and soaring property prices, is unfairly targeting middle-class families who are already dealing with the emotional and financial strain of losing a family member. The high tax bills often force heirs to sell family homes or other assets just to cover the costs, exacerbating their distress.
Supporters of the tax, however, argue that it is a necessary tool for redistributing wealth and funding public services, especially during times of economic uncertainty. They contend that only a small percentage of estates are subject to inheritance tax, and the revenue generated is crucial for supporting the nation’s finances.
As the debate intensifies, the Treasury’s approach to inheritance tax is under increasing scrutiny, with calls for reform growing louder. The question remains: is the government’s revenue strategy fair, or is it profiting at the expense of grieving families?
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