Surge in inheritance tax payments for families

New statistics reveal a significant increase in inheritance tax payments among estates.

Families face growing burden of inheritance tax

The number of families impacted by inheritance tax has increased by 13 percent, according to new data from HM Revenue and Customs. In the 2022-23 tax year, 31,500 estates were subject to inheritance tax, representing an increase of 3,700 estates from the previous year. Additionally, the government raised £6.7 billion from inheritance tax, a 12 percent jump compared to the prior year. This trend is largely attributed to asset price inflation and the current freeze on inheritance tax thresholds. Starting April 2027, pensions will also be included under inheritance tax, potentially doubling the percentage of estates liable for this tax to 10 percent by 2030, as estimated by the Office for Budget Responsibility.

The sharp rise in inheritance tax signals a growing financial strain on families already coping with loss. As asset prices rise, many homes and properties exceed threshold limits, funneling more families into tax liabilities they may not have anticipated. The looming inclusion of pensions in the tax net threatens to escalate this impact further, creating a wider financial burden that could reshape estate planning for many. Such tax policy changes raise pressing questions about the fairness of how estates are taxed and about the long-term effects on wealth distribution in the country.

Highlights

As asset values continue to rise, more families will likely face this tax burden.