Why do Britons think inheritance tax is unfair?

Matthew SmithHead of Data Journalism
November 23, 2023, 11:27 AM GMT+0

Topping the list is the idea that it represents ‘double taxation’

There has been speculation at various points this year that the government would make cuts to inheritance tax. YouGov tracker polling has consistently shown that Britons consider inheritance tax to be unfair, and a July survey found that a majority (56%) would support scrapping it.

Few estates actually pay inheritance tax (less than 4% in 2020-21), although YouGov research for The Times in July found that approximately 15% of Britons expect to receive an inheritance in future that they will have to pay the tax on, and 31% expect that the tax will be levied on assets they themselves leave behind when they die.

Nevertheless, these figures are still significantly smaller than the 61% of Britons who said that inheritance tax is unfair in a survey in late September. So why do people consider the tax to be unfair? We asked these respondents to describe their reasoning for us – respondents answered in their own words, which we have grouped into the categories below.

By far the most common reason is the perception that inheritance tax represents ‘double taxation’ – that the deceased had already paid various taxes when they earned their money and purchased their property, and were now effectively being forced to do so again in order to pass it on. More than four in ten of those who consider inheritance tax unfair gave this as a reason (42%).

"Why should anyone have to pay tax on money that has already been taxed god knows how many times over? Inheritance tax is grossly unfair to anyone who has to pay it."

"People work all their lives to save and leave something for their children having already paid tax on it, its a double hit."

"People are taxed on earnings, savings, pensions - so all dues have been paid."

Why is inheritance tax unfair?

In a distant second place (at 17%) was a general rejection of the principle, with respondents simply saying that the government shouldn’t tax inheritance.

That the inheritance tax threshold kicks in at too low a level was one of the more common responses, at 10%. Many of these respondents feel that it is unfair that rising house prices are drawing people who are otherwise not ‘wealthy’ into the inheritance tax bracket.

"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."

"Considering average house prices currently, the sale after a death of a somewhat ordinary property attracts this tax."

"The limit is too low for people living in the South where house prices are much higher than in the North of the country."

Why is inheritance tax unfair?

That the 40% inheritance tax rate is too high is also a source of unfairness for 9% of respondents.

"If an average family works hard and saves it seems wrong that the benefits are confiscated by such an onerous 40% tax."

"Astronomical rate of tax for £325,000, it should be tiered so the more you inherit the more tax you pay."

"40% is too high to take from a grieving family and their hard earned earnings."

Why is inheritance tax unfair?

One in nine (11%) are critical of what they see as a penalising aspect of inheritance tax – that it punishes those who choose to save in order to pass on a nest egg when they die, rather than simply spending all the money while they live.

"It is a tax on those who budgeted for their future and that of their families, often going without."

"It's double taxation, a punishment for being financially responsible and totally immoral."

"People work hard, save and go without to leave as much as possible to loved ones only to have a part of it deducted. Others who have not made the effort and taken from the tax payer have nothing taken away."

Why is inheritance tax unfair?

Separately, as can be seen in some of the examples above, there is a noticeable emotional seam cutting across categories: that the money involved has been ‘hard earned’, either by the respondent themselves or by their family members. Around one in seven (15%) brought this up when explaining why they think inheritance tax is unfair.

See the full results here

Photo: Getty