Inheritance tax: Warning 'demographic time bomb' will see Britons pay £90billion

Pensioner looking at finances with laptop in front of him

Britons are going to be hit with a huge increase in inheritance tax bills

Dan Falvey

By Dan Falvey

Published: 19/08/2023

- 15:29

Updated: 14/11/2023

- 16:15

The threshold for inheritance tax was frozen in 2009

Baby boomers will pay as much £90billion in inheritance tax over the next decade, new analysis indicates.

Britons are already paying more in death duty to HMRC than ever before, with the rate set to only rise in the coming years.

With high inflation and the threshold for inheritance tax frozen, there has been an increase in the number of families finding themselves required to hand over money to the taxman.

And now, analysis for The Telegraph by brokers Best Invest has suggested that these factors when combined with a decline in the death rate will lead to a mega cash grab from HMRC.

HMRC logo outside tax department

HMRC will rake in £90billion in inheritance tax over the next decade


Jason Hollands, of the broker Best Invest, said: "Deaths from this generation will likely spike between 2026 and 2030, generating a surge in inheritances."

He added: "The stealth tax effect of frozen allowances, combined with demographics, is set to deliver the Treasury with a tax bonanza.

"No wonder the Chancellor decided to push the long freeze on the nil rate band out even further."

Inheritance tax is imposed on estates worth more than £325,000, with an additional £175,000 allowance applied to family homes passed to direct descendants.


The threshold for the tax was frozen in 2009.

Since then, the number of people paying inheritance tax each year had more than doubled.

Suggesting that the problem will only get more pronounced, Rachael Griffin, of the wealth manager Quilter, said Britain was facing a “demographic time bomb”.

She said: "We will see the death rate increase over a considerable period as the baby boomer generation ages and ultimately passes on.

Pensioner and younger person looking at book

Experts have warned it will be families not the deceased who are impacted most from the inheritance tax threshold freeze


"We recently saw a surge in inheritance tax receipts as a result of an increased death rate from Covid, so this would give an indication of what is likely to come."

A Government spokesman said: "The vast majority of estates do not pay inheritance tax – more than 93 per cent of estates are forecast to have zero IHT liability in the coming years and the tax raises more than £7billion a year to help fund public services millions of us rely on daily.

"Estates of surviving spouses and civil partners can pass on up to £1million without an IHT liability – significantly more than the value of the average UK home of £286,000."

You may like