Article

Only 18% of Brits think inheritance tax is fair

Press release
February 15, 2022

Fewer than one in five Brits think inheritance tax is fair

  • Only 18% of people in Great Britain think inheritance tax is fair and 57% think it’s unfair
  • Women are less likely to think inheritance tax is fair compared to men
  • Younger people are more scared of inheritance tax than older people

Fewer than one in five people in Great Britain think inheritance tax is fair, according to new research from financial advisers NFU Mutual.

Inheritance tax is charged at 40% on assets including cash and property left on death, although everyone can leave £325,000 tax-free, plus up to an additional £175,000 on the value of their home if left to a ‘direct descendent’.

According to nationally representative research, just 18% of people in Great Britain think it is fair. More than half (57%) think it is unfair, while a quarter of people (25%) don’t know.

Nearly three times as many Brits think the tax-free allowances are too low than those who think they’re too high.

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Inheritance tax is one of the most unpopular taxes and the numbers paying it are steadily rising as are the size of the tax bills families are facing.

“The £325,000 tax free allowance hasn’t changed for thirteen years and is set to remain frozen until 2026.

“Although most can leave up to an additional £175,000 of the value of their home to a ‘direct descendant’ not everyone is able to take advantage of it. Those without children miss out completely and those whose estates exceed £2m can lose some or all of this extra tax-free benefit.   

“As house prices and other asset values continue to rise, more families will have to pay the tax. The good news is there are a number of ways of reducing inheritance tax. A good financial adviser will be able to explain the options available.”

Younger people who need inheritance to buy homes more scared of IHT

The government collected just over £4.6 billion in IHT between April and December 2021, which was £600m more than the same period in the previous year.

More than a quarter of people (27%) in the UK are scared of paying inheritance tax, compared to 53% who are not. But 18-24-year-olds are more scared of inheritance tax than any other age group.

Sean said: “Younger people are becoming increasingly reliant on inheritance or cash from parents and grandparents to get on the property ladder so it’s not surprising they fear a tax that could affect those plans.

“An increasing number of families are recognising the rising threat of inheritance tax and using pensions, which are normally free from inheritance tax, and other gifting strategies to pass wealth down the generations tax free.”

-ends-

Notes to editors
Nationally representative research with 2,100 people across Great Britain carried out by Yonder on behalf of NFU Mutual between 29/01 and 01/02.

For further information please contact:

Matt Wilson
Senior Press Officer
07890 255381
matt_wilson@nfumutual.co.uk

Find more of our press releases at the NFU Mutual Media Centre: www.nfumutual.co.uk/media-centre