Inheritance tax already up 10 per cent as Reeves looks to squeeze levy in Budget, official figures show

Chancellor warned that hiking the tax at next week’s Budget risks punishing middle-class homeowners

Britons are already paying more inheritance tax as Rachel Reeves looks to squeeze millions more from the levy, official figures show.

Payments swelled the Treasury’s coffers by £4.3bn in the six months since April, £400m more than in the same period in the previous financial year and a rise of 10 per cent, new data from HM Revenue and Customs shows.

The chancellor Rachel Reeves has been warned that her plan to hike the tax at next week’s Budget risks punishing middle-class homeowners.

Ministers are considering how they can get more money from what critics have denounced as the “death tax”, which raises around £7bn for the Treasury each year.

The tax is routinely found to be one of voters’ least favourite measures, despite just 4 per cent of people paying it.

Rachel Reeves is considering how to raise millions more from inheritance tax (EPA)

Stephen Lowe, from retirement specialists Just Group, said: “Halfway through the tax year, the continued increase in IHT (inheritance tax) receipts comes as no surprise. With thresholds frozen and property prices still climbing, more estates are being drawn into the scope of IHT.

“Ahead of the much-anticipated Autumn Budget, rumours abound that inheritance tax could be under review as the government looks for ways to boost revenue and fill its fiscal ‘black hole’. Whether or not changes are introduced, it’s vital that people understand where their estate stands in relation to the current IHT threshold.”

The tax raises around £7bn a year for the Treasury (Dominic Lipinski/PA) (PA Archive)

Nicholas Hyett, investment manager at the company Wealth Club, said: “Inheritance tax is an absolute cash cow for His Majesty’s Revenue and Customs, which is why it remains in the spotlight ahead of next weeks’ Autumn Budget. No one knows what changes will be announced, but most agree there will be some attempt to milk more revenue from estates.

“The great thing about inheritance tax from the government’s point of view is that it’s complicated, with a whole host of rules that could be tweaked to boost the tax take.

Whilst this may only affect a minority of people, it will infuriate those it does and could still do serious economic damage.”

He added: “Throwing the kitchen sink at IHT may be good politics in the short term, but it risks doing long run damage.”

The Treasury and HMRC have been approached for comment.