The annual amount raised by inheritance tax will rise from £7 billion to £15 billion over the next decade a recent report has found.
As each generation amasses more wealth, those who inherit will have to pay more to the Treasury, the Institute for Fiscal Studies report states.
While inheritance tax affects just 4 per cent of estates at the moment, the IFS report suggested it will hit more than 7 per cent by 2032-3, ten years away.
The number of people affected by the tax will also grow. In a decade, one in eight (12 per cent) are set to have inheritance tax due when either they or their partner dies.
The research suggests that the growth in the size of inheritances will be much stronger than official forecasts suggest, increasing the tax take for the Government.
There is a dramatic variation between different parts of the country. Nearly a quarter of people (23 per cent) in London are in line to pay the tax in a decade – twice the national average.
Next year, it is anticipated that the wealthiest fifth of parents will bequeath an average of £380,000 per child, and pay inheritance tax of around 10 per cent of this amount. By contrast, the least wealthy fifth of parents will leave less than £2,000 per child.
The report also found a huge difference in wealth. By the age of 50 to 54, children of the richest fifth of parents will have accumulated an average of £830,000, while children of the least wealthy fifth only have an average of £180,000, it concluded.
The report is well worth reading and may be found at:
https://ifs.org.uk/publications/reforming-inheritance-tax
