Middle-class families whose properties have increased in value are now paying inheritance tax (PA). Inheritance tax is “no longer just for the rich”, experts have warned, as increasing numbers of Britons face six-figure bills.
The Treasury brought in £2.4 bn in inheritance tax receipts in three months to July, £300 mn higher than the figure for the same period last year. The standard inheritance tax rate is 40 per cent, which is only charged on the portion of an estate that is above the tax-free threshold of £325,000.
The value of an estate includes the property, money and possessions of someone who has died. If the value of an estate is below £325,000, there is normally no inheritance tax to pay. It is also possible to bypass the tax by leaving everything above the £325,000 threshold to a spouse, a civil partner, a charity or a community amateur sports club. The threshold has stayed the same since April 2011, but property prices have soared, meaning increasing numbers of people are paying more tax when they die.
The average cost of a property rose by £140,129 between April 2019 and June 2022. This means that it is not just millionaires who are having to stump up money in inheritance tax, but also many middle-class families who have seen the value of their properties rise, experts said.
