Inheritance tax increase could backfire for Reeves

Suitably, as Halloween approaches, the "death tax" (or inheritance tax, as it's formally known) is spooking Britain again.

- JAMES MOORE

The pre-Budget scuttlebutt suggests inheritance tax is in Rachel Reeves's sights as she battles to plug a fiscal black hole that could be as high as £40bn.

If so, the chancellor is playing with fire. Tax is never popular but this is one of Britain's least loved levies.

YouGov says its polling has consistently found that Britons consider inheritance tax to be "unfair" despite the fact that most of them never pay a penny. A survey it conducted in July of 2023 found a majority (56 per cent) would support scrapping it entirely.

More than four in 10 (42 per cent) people felt it amounted to double taxation and that hard-earned money, which is already heavily taxed, shouldn't get hit again when it is passed on especially not at a rate of 40 per cent.

The counter argument - that it's money the recipients haven't earned or paid tax on - simply doesn't cut through, despite the numbers telling us that this isn't the Halloween tax horror most people think it is.

Far more people worry about inheritance tax than ever pay it. It currently kicks in on any estate worth more than £325,000 and the threshold is frozen up to and including 2027-28. HM Revenue & Customs figures for the 2021-22 tax year show that just 4.39 per cent of UK estates - 27,800 - breached the threshold and resulted in an Inheritance Tax (IHT) charge in that year.