- The most despised tax in the UK is the inheritance tax, named by one in four people
- Taxes on Income including Income Tax and National Insurance took second place
- Third place is jointly held by tax on expenses and tax on investments.
- We hear from tax experts on the prospect of raising Britain’s most hated taxes
- Do you need help with inheritance planning? Find a Financial Advisory Service
The inheritance tax has been named Britain’s most hated tax, despite being paid by only 4 percent of the population’s wealth.
According to a survey by Hargreaves Lansdowne, one in four people consider it their least preferred tax, which makes it more unpopular than income tax, national insurance and VAT.
The tax on income, which includes income tax and national insurance, is the second most detestable, with 17 percent of Britons choosing it as their most insignificant levy.
The most hated tax in the UK is the inheritance tax, named after one in four people
Sarah Coles, personal finance analyst at Hargreaves Lansdowne, said: ‘No one enjoys actively paying taxes, but when we are ready to accept some as a fact of life, others we inspire deep and lasting hatred among millions of people.
‘Our aversion to the inheritance tax belies the fact that only 4 percent of people actually pay it, and only £3.1 billion of the £334.3 billion taken in as tax between April and September this year inherits was taxed.
She adds: ‘In many cases it is more of an ideological outrage, rather than a specific irritation about how it affects us.
‘People don’t like to think about money they’ve already paid taxes on when they don’t, and they want their loved ones to benefit from their inheritance rather than the taxpayer.’
But when it is paid for by estates of only a small amount, the amount charged by the taxpayer has nearly doubled in a decade, from £2.9 billion in 2011/12 to £5.2 billion in 2020/21.
Recent decades have seen more families fall into the inheritance tax trap, as rising property prices tend to affect a generation’s worth of homes.
In addition to the own-residence zero rate band of £175,000 each, which took the total amount that can be passed on to direct descendants by a married couple or civil partners of up to £1 million, this has been stopped but The numbers are expected to climb again.
Some analysts suggest that in the future one in ten estates may have to pay 40 percent tax on some assets transferred.
The survey also found that taxes on investments such as the capital gains tax were jointly third on the list of most despised taxes – with 15 percent voting it as their most hated form of taxation.
|do||% of Britons who hate it the most|
|tax on expenses||15%|
|tax on investment||15%|
|Sin tax (sugar, alcohol, petrol)||10%|
|tax on property purchase||8%|
|property investment tax||4%|
Men are more likely to resent the tax on spending — 13 percent than women at 18 percent, while women are more likely to resent an inheritance tax — 27 percent compared to men’s 22 percent.
With the budget coming out on Wednesday, the tax is expected to increase as the government seeks to compensate the coffers that have been spent battling Covid.
The government borrowed £320 billion in the year ending April 2021, the highest figure recorded outside wartime, and economists expect the government to borrow another £180 billion by the end of this tax year.
As the Chancellor weighs potential tax changes to the budget, we take a closer look at the inheritance tax, as well as taxes on income and investments, and consider the possibility of any increases on Wednesday.
|do||tax year||total raised||% of all UK tax receipts||average cost per family|
|inheritance tax||2019/20||£5.1 billion||0.6%||£170|
|Income tax||2019/20||£193.6 billion||23.4%||£6,800|
|national insurance||2019/20||£145 billion||17.5%||£5,100|
|Tax on Expenses (VAT)||2019/20||£134 billion||16.2%||£4,700|
|Capital gains tax||2019/20||£9.8 billion||1.2%||£340|
|Source: Office for Budget Responsibility|
What is this?
Inheritance tax is a tax on the property of a person who has passed away.
Inheritance tax is 40 percent higher than the tax-free allowances everyone receives on their assets, known as the zero rate band.
This is made up of a standard zero rate band of £325,000 per person – any unused element of which can be transferred to a spouse or civil partner, effectively doubling their allowance to £650,000.
Under current rules, if you give a principal family home to direct descendants, a total of £500,000 each, or £1 million combined, is the maximum value that a married couple or civil partners’ property will reach before becoming liable for it. can. 40 percent inheritance tax rate.
Overall, this means that property-owning spouses could benefit from a £1 million buffer before inheritance tax on their property.
But if the total value of a property is £2 million or more, the additional principal residence zero rate band will be tapped at £1 for every £2 over the £2 million limit, meaning that some higher value estates will eventually Lose your household benefits completely.
|tax year||Government inheritance tax receipts (£billion)|
|Source: HMRC / NFU Mutual|
The basic other major inheritance tax to remember is the seven-year rule.
This applies to gifts that exceed a set limit – for example, making more than £3,000 in gifts per year – and are potentially known as discount transfers.
Such gift will be exempt from inheritance tax only if you live more than seven years…