Surge in families caught out by inheritance tax

The number of bereaved families forced to pay inheritance tax has surged 13 per cent.

New data from HM Revenue and Customs shows that 31,500 estates paid inheritance tax (IHT) in the 2022-23 tax year, 3,700 more than the year before.

The total amount raised for the Treasury hit £6.7 billion, up 12 per cent on the 2021-22 tax year. HMRC said this increase was probably down to rising asset prices and the freeze on IHT thresholds.

And even more families are set to be caught in the IHT net from April 2027, when pensions are to become subject to IHT. The Office for Budget Responsibility expects the change to result in the proportion of estates paying IHT to double to 10 per cent by 2030.

Changes to how farms and family businesses pay IHT will also push up the tax take for the Treasury, which is expected to collect more than £14 billion a year in IHT by the end of the decade.