HMRC could hit UK households with homes worth £290k with £82,000 bill

Rachel Reeves is poised to unleash a tax raid on bereaved families, which could hit the typical homeowner with an £82,000 bill. The Labour Chancellor may be preparing to launch an inheritance tax assault that will penalise property owners if it goes ahead.
A working-age single homeowner residing in an average-priced dwelling in England (£290,395) alongside a modest pension fund of £415,000 faces being clobbered with an inheritance tax demand of £82,158. This follows Ms Reeves' announcement that pension pots will lose their inheritance tax exemption from April 2027, meaning they will face charges of up to 40%. The alteration is anticipated to push the proportion of estates paying death duties from 4% to 9.7%.
Additionally, Ms Reeves is mulling proposals to end families' ability to make unlimited tax-free gifts to their offspring as part of plans to tighten inheritance tax regulations.
Jon Greer, head of retirement policy at Quilter, said: "A grieving family with young children and an average priced home could face six-figure IHT bills at the most distressing time.
"Married couples are protected by exemptions and allowances; cohabitees aren't."
He added that, without phasing in the change gradually, the policy risks causing a financial hit that can destabilise a family's future despite raking in very little additional revenue.
Rachael Griffin, tax and financial planning expert at Quilter, warned: "Such a cap would bring more gifts into scope for inheritance tax and could capture not just large transfers designed to reduce tax bills but also modest, routine support between family members."
She further revealed that research from Quilter shows that retirees give around £2,500 a year to loved ones, much of it to help them with education and living costs.
She added that without careful thresholds and exemptions, the system could unfairly penalise families that regularly make small gifts over many years.
Daily Express