The Chancellor’s plans for inheritance tax have caused widespread anger (Image: Adam Gerrard )
CHANCELLOR Rachel Reeves has been accused of following a “classic Marxist playbook” amid fears bereaved families will face even higher bills on top of inheritance tax.
The Government is hiking the on late “death tax” payments so bereaved families could end up being charged nearly 9%.
Darwin Friend, head of research at the Taxpayers’ Alliance, said: “Inheritance tax is set to become an even more cruel and capricious tax as a result of the hike in interest on unpaid tax. For many people, as well as the pain and suffering that accompanies the death of a loved one, one of the biggest challenges when receiving inherited wealth is gaining the legal right to manage it.
“This often takes months, placing them at risk of huge interest bills on top of their tax liabilities. Politicians should join our campaign to scrap inheritance tax completely.”
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There is deep concern that many families will fail to pay the tax on time because of delays in getting permission to sell inherited assets such as a house. If so, they will have to pay even bigger late interest payments because is hiking the charge from 2.5% above the base rate to 4% from April.
This means that if the Bank of England does not cut the base rate, bereaved families would face interest payments of 8.75%. The move is expected to net the Treasury £260million in 2026-27.
John Longworth, chairman of the Independent Business Network, accused the Government of following a “classic Marxist playbook”.
He said: “This Marxist, anti-family, anti-enterprise, anti-growth Government is attempting to rob families of hard-earned wealth through punitive inheritance tax rules. This is not the Government’s money and will be a disincentive to innovation and hard work.”
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Shadow Business Secretary Mr Griffith condemned the move, saying: “Labour will tax you from the cradle to beyond the grave – and now they want to charge higher interest on top. Their massive extension to the much-hated ‘death tax’ will crush small businesses, bankrupt family farms and even target bereaved military families.”
Maxwell Marlow of the Adam Smith Institute, said it was “no wonder” people are often late with parts of their inheritance tax bill.
He said: “Estate planning is notoriously difficult, time-consuming and expensive, and frozen tax thresholds have meant that thousands more people, many of whom won’t be able to afford expensive accountants, are now having to cope with it at a time of grief… It’s time it was scrapped altogether.”
A Treasury spokesman defended the Government’s plans, saying: “We took some difficult decisions in the Autumn to wipe the slate clean and now we are focused on delivering our Plan for Change. Over 90% of estates do not pay inheritance tax and the £2billion reforms will raise in revenue will go towards the vital public services we all rely on.”