At a time of spiralling inflation, rising house prices, and frozen inheritance tax allowances, Inheritance tax is hitting Britons harder than it ever has before.
The takings of Inheritance Tax by the Treasury last month was £100million higher than in the same period last year and it has been predicted that Britons are set to pay £37billion over the next five years.
In 2007, George Osborne said only millionaires would pay inheritance tax under a Conservative government.
Sajid Javid said he was considering scrapping inheritance tax when he was Chancellor in 201
What has happened however is that the nil-rate band has been frozen for more than a decade at £325,00 per individual, while the residence nil-rate band has been set at £175,000.
Both have been frozen by the former Chancellor Rishi Sunak until 2026.
As the nil-rate band has not increased in line with inflation, it has had sizeable implications for inheritance tax.
The average inheritance tax bill three years ago was around £209,00.
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However, it is more likely to now be 27 percent higher at just over £266,000 in the 2022/23 tax year.
Accountancy firm PwC calculated that if the £325,000 allowance had risen in line with inflation every year since 2009, it would currently stand at £478,078.
This would have allowed a further £153,078 to be left to loved ones tax free.
The UK’s new Chancellor Nadhim Zahawi, who was appointed the Cabinet role this week after Mr Sunak resigned, has been called upon to reform the personal tax allowances.
The move to freeze the allowance by the former Chancellor was widely unpopular and was branded as a “stealth tax” as millions of Britons are dragged into the higher brackets with rising inflation.
Reversing the freeze and increasing the could provide the new Chancellor with a quick win to turn the tide with a financially squeezed electorate, many of who have taken to Twitter to share their anger.
Twitter user @Andriana said: “I voted Conservative because we were promised that inheritance tax would be abolished as we have already been taxed all our working lives.
“Australians and other countries don’t pay for it, so why should we? Our children and grandchildren will never be able to buy their own properties as the cost of living is so high.
“The rich can pay accountants to avoid paying the tax which is so unfair because they get richer and pensioners are hit the most. This Government should be helping them!”
Currently, Inheritance tax is payable on the estate of someone who has died.
Anything over the current nil-rate band is taxed at a rate of 40 percent and no inheritance tax is paid if the estate is worth less than the threshold.
Meanwhile, @Sodit12 added:: “I will not vote for the Conservatives until they honour the promises they made in 2009 to increase the tax free band to one million (now about 1.2 million).
“The harm it does to many is dreadful.”
There are ways that Britons can legally reduce inheritance tax, these include things like putting property into a trust, donating part of someone’s estate to a charity, and gifting to family when the person is still alive.
Mr Zahawi told Times Radio on Wednesday morning that he could roll back the corporation tax rise planned for next April adding that he will “look at everything” as he plans his economic strategy which is hinted at being different to Mr Sunak’s “balance the books” approach.