Twice as many grieving families set to pay inheritance tax by 2026

Twice as many grieving families will pay inheritance tax five years from now, spending watchdog predicts

  • New forecasts show 41,400 families could be paying inheritance tax by 2026 
  • Inflation and rising property prices pushing value of estates over tax-free mark
  • Some 6.5 per cent of households could face the 40 per cent tax within five years 

Nearly twice as many bereaved families will be paying inheritance tax in five years, the spending watchdog predicts.

The Office for Budget Responsibility believes that 6.5 per cent of estates will face the 40 per cent death tax burden by 2026 – up from 3.7 per cent last year.

It said it expects the Treasury to be drawing in £7.6billion a year by 2026, an increase on the £6billion this year. 

The forecast shows 41,400 families could be paying the tax every year by 2026.

It is understood that soaring inflation and rocketing property prices are to blame for pushing the value of more estates over the tax-free threshold.

The Office for Budget Responsibility believes that 6.5 per cent of estates will face the 40 per cent death tax burden by 2026 – up from 3.7 per cent last year 

Robert Salter, of accountancy firm Blick Rothenberg, said it was a stealth tax. 

He said: ‘It’s a clever and easy way to rake in more, but is painful and unfair on the bereaved.’

The inheritance tax threshold has remained at £325,000 since 2009, and an additional £175,000 allowance for the family home will also stay frozen until 2026. 

Any unused inheritance tax allowance can be passed to a spouse, meaning married couples and civil partners can leave an estate totalling £1million without their family having to pay up.

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