Inheritance tax (IHT) is widely considered the most unpopular tax in Britain due to the perception of double taxation, its seemingly low threshold in relation to rising property values, and the feeling that it penalises those who save rather than spend during their lifetime.
In the tax year 2021 to 2022, only 4.39% of UK deaths resulted in an Inheritance Tax charge, affecting 27,800 taxpaying estates-a 3% increase from the previous year. Despite this relatively small percentage, public opinion remains firmly against it, with a January 2025 poll showing that 55% of Britons support cutting or abolishing inheritance tax altogether.
The tax has generated substantial revenue for the government, with figures showing an increase of nearly 10% over the last year, rising by £0.8 billion to reach £8.2 billion between April 2024 and March 2025. The Institute for Fiscal Studies projects that the proportion of estates affected by inheritance tax will increase from about 5.5% currently to 7% by 2032-33, with government revenues from the tax nearly doubling from £8 billion to £15 billion during the same period.
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Why is Inheritance Tax So Unpopular in the UK?
When examining why inheritance tax triggers such strong negative reactions amongst the British public, several key factors emerge. Understanding these objections provides insight into the widespread dissatisfaction with this particular form of taxation.
Double Taxation: Paying Twice on the Same Money
By far the most common objection to inheritance tax, cited by 42% of respondents who consider it unfair, is the perception of double taxation. Many people feel strongly that the money being taxed has already been subject to income tax, National Insurance, capital gains tax, and other levies during the deceased person’s lifetime. The notion that the same assets face another substantial tax burden at death feels fundamentally unjust to many Britons.
This sentiment was captured perfectly by one respondent in a YouGov survey who described IHT as “double taxation, a punishment for being financially responsible and totally immoral.” This view reflects the widespread perception that inheritance tax represents an additional penalty on wealth that has already been taxed once-sometimes multiple times-throughout a person’s lifetime.
Threshold Too Low in a High-Property-Value Market
Another significant concern, mentioned by 10% of respondents, is that the inheritance tax threshold is set too low, particularly in relation to soaring property prices. The nil-rate band has remained frozen at £325,000 since 2009 and is currently set to stay at that level until at least 2030. Had it increased with inflation, it would now stand at approximately £510,921.
This stagnant threshold means many ordinary homeowners are being pulled into the inheritance tax net purely because of property inflation, especially in the South of England where house prices are considerably higher. As one survey respondent noted: “House prices have risen to such a degree that the £325,000 limit affects too many people and while ordinary folk lose 40%, rich and financially sophisticated people will find ways around it.”
Punishingly High Tax Rate
The 40% rate of inheritance tax is viewed by many as excessively high, with 9% of respondents specifically highlighting this concern. This substantial rate can feel particularly harsh to families who may need to liquidate assets quickly to pay the tax bill within the required six-month timeframe.
One respondent described it as an “astronomical rate of tax” while another called it “too high to take from a grieving family and their hard earned earnings.” The perception is that nearly half of what should go to loved ones is instead claimed by the government, often at a time of emotional distress.
Penalises Saving and Financial Planning
One in nine respondents (11%) criticised inheritance tax for penalising those who choose to save money to pass on to their families rather than spending it all during their lifetime. This creates a perception that the tax system encourages consumption over prudence and saving.
As one respondent put it: “It is a tax on those who budgeted for their future and that of their families, often going without.” This viewpoint suggests that inheritance tax discourages financial responsibility and long-term planning for future generations.
How the Public Views Different Types of Taxation?
The table below shows how inheritance tax compares to other common taxes in terms of public perception of fairness:
| Tax Type | Public Perception | Main Objection | Who It Affects |
|---|---|---|---|
| Inheritance Tax | Most unpopular | Double taxation | 4-6% of estates |
| Income Tax | Less unpopular | Direct impact on earnings | Most working people |
| National Insurance | Less unpopular | Clear connection to benefits | Most employed individuals |
| Corporation Tax | Less unpopular | Affects businesses not individuals | Companies |
| Capital Gains Tax | Mixed views | Only on profits | Property/asset sellers |
This comparison highlights the unique position of inheritance tax in public sentiment. Despite affecting far fewer people than income tax or National Insurance, it generates much stronger negative reactions. This paradox suggests that objections to inheritance tax are often based on principle rather than personal impact, as many of those opposed to it will never actually have to pay it.
What Percentage of People Actually Pay Inheritance Tax?
Despite its significant unpopularity, inheritance tax affects a relatively small portion of estates. Currently, fewer than 1 in 20 estates pay any inheritance tax at all. In the tax year 2021-22, just 4.39% of UK deaths resulted in an inheritance tax charge. This percentage has remained relatively stable, staying below 5% since 2007-08.
The gap between perception and reality is striking-while approximately 4-6% of estates actually pay the tax, YouGov polling found that 31% of Britons expect that the tax will be levied on assets they leave behind when they die, and 15% expect to receive an inheritance that will be subject to the tax. This suggests a significant overestimation of the likelihood of being affected by inheritance tax.
However, with the threshold frozen at £325,000 until at least 2030 and property prices continuing to rise, more estates are expected to become liable for the tax in coming years. The Institute for Fiscal Studies projects that by 2032-33, the proportion of estates subject to inheritance tax will rise to 7%.
Do Rich People Avoid Paying Inheritance Tax?
One common complaint about inheritance tax is that the wealthiest individuals often find legal ways to minimise their liability, while those with modest estates-particularly those consisting mainly of property-are unable to avoid it. This perception contributes significantly to the sense of unfairness surrounding the tax.
Many Reddit users echo this sentiment, with one commenting: “My biggest issue with it is that the really rich sidestep it… Just put everything in a trust and nobody pays anything. But it costs £50k to set up and administer the trust!” This perception that the tax can be avoided by those wealthy enough to pay for sophisticated financial planning increases resentment among middle-class families who feel they bear a disproportionate burden.
At Property Saviour, we’ve seen this frustration firsthand when working with families handling inherited properties. The perception that the wealthiest can structure their affairs to minimise tax while ordinary homeowners cannot access the same strategies creates a sense of injustice that fuels opposition to inheritance tax.
How Inheritance Tax Affects Property Values and Housing Markets?
The relationship between inheritance tax and the UK housing market is complex and multifaceted. With property often being the largest asset in many estates, the impact of inheritance tax on property decisions can be significant.
For many families, the family home represents both emotional value and the main financial asset to be passed down. As property prices have increased dramatically over recent decades, particularly in London and the Southeast, modest family homes can now easily exceed the inheritance tax threshold. This has created a situation where housing wealth pushes otherwise ordinary estates into inheritance tax territory.
Some property owners choose to downsize or make gifts during their lifetime to reduce potential inheritance tax liability. Others may put off necessary home improvements or moving to more suitable accommodation due to concerns about increasing the value of their estate. These decisions can have unintended consequences for the housing market as a whole.
How to Minimise Inheritance Tax on Property?
When it comes to reducing potential inheritance tax liability on property, there are several legitimate planning strategies available:
Make use of the residence nil-rate band for family homes
Consider gifting property at least seven years before death
Place property in certain types of trusts
Take out life insurance policies written in trust to cover potential tax bills
Utilise spousal exemptions if married or in a civil partnership
It’s important to note that inheritance tax planning should be done with professional advice to ensure all actions are legal and appropriate for individual circumstances.
Will I Have to Sell My Inherited House to Pay Inheritance Tax?
One of the most common concerns about inheritance tax is whether beneficiaries will be forced to sell inherited property to pay the tax bill. This is a legitimate worry since inheritance tax must be paid within six months of death, often before the estate has been fully settled.
Edith from Manchester recently faced this exact dilemma when she inherited her mother’s house valued at £600,000, with few other liquid assets in the estate to cover the inheritance tax bill. With the nil-rate band of £325,000, she was facing inheritance tax on £275,000 at 40%, resulting in a tax bill of £110,000 due within six months, despite the property still being occupied by tenants on a fixed-term tenancy.
“I simply didn’t have £110,000 in savings to pay the inheritance tax bill, and I couldn’t sell the house quickly because of the sitting tenants,” Edith explained. “I was worried HMRC would add interest to an already substantial tax bill while I waited for the tenancy to end.”
Edith reached out to Property Saviour, who specialise in purchasing properties with sitting tenants. As a property buying company that offers a we buy any property service with a guaranteed sale, they were able to purchase the property quickly, despite the complication of sitting tenants. This allowed Margaret to settle the inheritance tax bill within the required timeframe, avoiding additional interest charges and providing certainty during a difficult time.
If you’re facing similar challenges with an inherited property and inheritance tax obligations, getting specialist advice and exploring all options is essential. Property Saviour understands these situations and can offer solutions tailored to your specific circumstances, providing the speed and certainty you need during what is already an emotionally challenging time.
What Are the Alternatives to the Current Inheritance Tax System?
Many experts and politicians have proposed alternative approaches to inheritance tax that might address some of the public’s concerns while still providing revenue for public services:
Graduated rates instead of the flat 40%, with lower rates for smaller estates and higher rates for extremely large ones
Higher thresholds that better reflect current property values, particularly in high-cost areas
Taxing recipients rather than estates through a system more like income tax on gifts and inheritances
Removing exemptions and loopholes that allow the very wealthy to avoid the tax
Regional adjustments to account for property value differences across the UK
Any reform would need to balance fairness with practical considerations of implementation and revenue generation. The current system, which generates over £8 billion annually, makes a significant contribution to government finances that would need to be replaced if major reforms were enacted.
What Is Public Opinion About Inheritance Tax?
Online discussions provide interesting insights into how the public perceives inheritance tax. One Reddit user observed: “It’s an age thing and it’s harder for young people with no kids to understand. Parents want to leave all they can to their children, and they think it’s fundamentally unfair that they have to give any of what they have already earned and paid tax on to the government when they die.”
Another commenter noted a fundamental difference in perspective: “I see IHT as the beneficiary paying tax on some unearned income, which feels fair. But lots of people see it as the dead person paying tax on money ‘they’ve already paid tax on’ which seems unfair.”
At Property Saviour, we’ve found these different perspectives reflect the emotional nature of inheritance. When helping clients sell inherited property, we often hear similar sentiments-the desire to honour a loved one’s wishes by preserving as much of their estate as possible conflicts with the practical realities of tax obligations.
How to Plan Ahead to Reduce Inheritance Tax Burden?
For those concerned about their estate’s potential inheritance tax liability, early planning is essential. Here are the key steps to consider:
Make a will that clearly outlines your wishes and takes advantage of available tax allowances
Consider lifetime gifts to reduce the value of your estate (remembering the seven-year rule)
Review and optimise the ownership structure of your property
Set up trusts where appropriate to protect assets
Regularly review your estate planning as tax rules and personal circumstances change
At Property Saviour, we regularly work with clients looking to reorganise their property assets for inheritance planning purposes. While we’re not tax advisers, our experience as a cash house buyer means we can provide quick and certain property sales when needed as part of a broader inheritance tax planning strategy.
Do People Support Reforming Rather Than Abolishing Inheritance Tax?
Research suggests that while inheritance tax in its current form is unpopular, there is support for reform rather than complete abolition. When presented with alternatives like higher thresholds or lower rates, many people express more favourable views.
Polling by Tax Policy Associates found that when asked about specific threshold levels, public opinion shifted significantly. While a majority found the current system unfair, when asked about a hypothetical £2 million threshold, only a minority believed that inheritance tax would unfairly over-tax estates.
Similarly, there was overwhelming support (almost 80%) for reducing the rate from 40% to 20%, suggesting that the high rate is a key factor in public opposition. This indicates potential public support for reformed inheritance tax with higher thresholds and lower rates.
Why Are Labour Voters Also Against Inheritance Tax?
Interestingly, opposition to inheritance tax crosses political lines. According to a January 2025 poll, 48% of 2024 Labour voters called for the tax to be cut or abolished, and 56% of Labour voters specifically opposed inheritance tax being charged on family farms.
This suggests that objections to inheritance tax are not simply based on traditional political ideologies but touch on deeper values around family, property rights, and fairness that transcend party allegiances. The widespread perception of inheritance tax as a “death tax” that penalises families at an already difficult time resonates across the political spectrum.
At Property Saviour, we’ve observed this cross-partisan sentiment in our clients’ attitudes toward inheritance tax when dealing with inherited properties. The emotional aspect of inheritance often outweighs political considerations, with most families simply wanting to honour their loved ones’ wishes to pass on what they’ve worked for throughout their lives.
Has the Inheritance Tax Threshold Kept Pace with Property Inflation?
The short answer is no-the inheritance tax threshold has fallen significantly behind property price inflation. The nil-rate band has been frozen at £325,000 since 2009 and is currently set to remain at that level until at least 2030. Had it risen with inflation, it would now be around £510,921.
This threshold stagnation, combined with rising property prices, creates “fiscal drag,” pulling more estates into the inheritance tax net simply due to inflation rather than actual increased wealth. This is particularly pronounced in London and the Southeast, where average property prices far exceed the national average.
The residence nil-rate band introduced in 2017 (now £175,000) has helped somewhat by providing additional relief for family homes passed to direct descendants. However, this is tapered away for estates worth more than £2 million and doesn’t apply to properties not used as the main residence.
If you’re concerned about the inheritance tax implications of a property you’ve inherited and are considering whether to sell, Property Saviour can help you understand your options. As experts in handling sensitive property sales, we offer empathetic support and practical solutions during what is often an emotionally challenging time.
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Estate agents and auctioneers can present several challenges when selling your property. Estate agents often charge substantial fees, typically a percentage of the sale price, which can significantly reduce your profits. The traditional selling process through an agent can be lengthy and unpredictable, with no guarantee of a sale.
Auctions, while potentially offering a quick sale, come with their own set of risks. The final sale price is uncertain, and you may be forced to accept a lower offer than anticipated if bidding is sluggish. Moreover, auction fees can be considerable, and the pressure of the auction day can be incredibly stressful for sellers.
If you’re dealing with inheritance tax issues related to property, remember that expert advice can make a significant difference. Property Saviour specialises in helping people in complex property situations, offering certainty and speed when you need it most. If you’re looking to sell inherited property quickly to settle tax liabilities or simply move forward, our team is ready to provide the support and solutions you need during this challenging time.
At Property Saviour, we offer a straightforward alternative to these traditional methods. We purchase properties directly, providing a fast, guaranteed sale without the uncertainties and costs associated with estate agents or auctions. If you’re looking for a swift, stress-free property sale, get in touch with our team today. We’re here to offer expert advice and guide you through every step of the process, ensuring you receive a fair deal with minimal hassle.
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