Inheritance tax (IHT) has once again been voted the most hated type of tax in the UK with one in four placing it at the top of their list

The survey conducted in September by Opinium for Hargreaves Lansdown found that 24% of participants believed that it was the worst tax that the UK had.

The respondents to the survey of 2,000 people felt more ‘irritated’ by the fact that their loved ones lost out on benefits from their legacies above paying any other form of tax.

Tax on income, which includes income tax and national insurance, took second place with 17% believing that it was the worst, and tax placed on spending and investment took joint third place with 15%.

Only one in 10 said that the most hated tax was the so-called ‘sin taxes’, which includes taxes on things such as alcohol, tobacco, fuel, and sugar.

Sarah Coles, personal finance analyst at Hargreaves Lansdown said: ‘In many cases, it’s more of an ideological resentment. Nobody actively enjoys paying tax, but while we’re prepared to accept some as a fact of life, others inspire deep and abiding hatred among millions of us.

‘As the chancellor weighs up potential tax changes in the Budget, details of the UK’s most hated taxes show just how unpopular a rise would be to many of them.’

Paid by just 4% of people in the UK, inheritance tax accounted for £3.1bn of the £334.3bn taken in tax between April and September this year. Inheritance tax collected by HRMC has risen £700m over the same period last year, HMRC states that the rise is due to a rise in wealth transfers due to the Covid-19 pandemic. The annual tax take from inheritance tax topped £6bn last year.

The two other suggestions as to why the tax has risen so dramatically over the last two years are that the majority of wealth in the UK is owned by those over 60 which is the age bracket where Covid-19 has resulted in more deaths.

It is also due to the freeze of the nil rate band as £325,000 which has meant that the asset amount an individual has free before they are charged the tax at 40% has not risen since 2009.

We advise that to reduce their tax bill, people can gift their families during their lifetime instead of leaving it all in their will.

People in the UK get a gift allowance of £3,000 each year that falls out of their estate immediately for inheritance tax purposes. People can also give small gifts of up to £250, specific gifts for family weddings, and unlimited regular gifts from income.

Outside the gifting allowances, you can also make gifts of any size, known as potentially exempt transfers, and as long as you live for at least seven years after handing it over, it falls outside of your estate for inheritance tax purposes. There is a little used exemption by demonstrating that you have surplus income , this also can be gifted away

If you need proactive tax advice please contact us today