Inheritance tax (IHT) has been labelled as the most unfair tax by Brits, new research from Canada Life has revealed.

The financial services firm found that when asked to rank the perceived fairness of the UK’s most common taxes, 54 per cent listed IHT as an unfair levy, followed by stamp duty (43 per cent) and council tax (40 per cent).

Of those who deemed IHT unfair, the most common reason cited was that it penalises people who have saved well and want to pass something on to loved ones (65 per cent).

Other reasons include a preference for assets to be given to loved ones instead of the government (59 per cent) and the levy feeling like double taxation (57 per cent).

Canada Life said that the findings highlight concerns amongst an increasing number of middle-income families who are being pulled into the IHT net because of frozen thresholds, rising property prices and forthcoming rule changes.

In the 2024/25 financial year, a record £8.2bn was collected in IHT, with the Office for Budget Responsibility forecasting IHT receipts to reach £9.1bn in the 2025/26 financial year.

Of those who believe IHT to be a fair tax, the top reason was because it supports public services (53 per cent).

The financial services firm stated that when asked about views on income tax, perceptions of fairness were strongly linked to earnings. Whilst 37 per cent feel it’s unfair to pay income tax on annual earnings less than £50,000, far fewer take issue with higher earners being taxed more.

Just 20 per cent say it is unfair on earnings between £50,000 and £125,000, and just 17 per cent for those earning over £125,000.

Canada Life added that whilst Brits are more protective when it comes to passing wealth to the next generation, they are seemingly more open to being taxed on current earnings. Just 20 per cent view National Insurance contributions as an unfair tax.

Canada Life technical specialist for tax and estate planning, John Chew, said that the research has shown that IHT is not just an issue confined for the wealthy few.

He concluded: "With thresholds frozen since 2009, strong property growth, plus pensions coming into scope for IHT from 2027, more and more families will be finding themselves caught in the IHT net. This has helped HMRC collect a record £4.4bn from IHT in the last six months, a figure forecast to increase in the years ahead.

"Despite IHT topping the rankings as the UK’s most unfair levy, our research found fewer than a quarter of over 55s (23 per cent) had given thought to an estate planning or inheritance tax strategy. Further reform expected in this month’s Budget may prompt more to consider their options when it comes to managing their wealth – whether through gifting or setting up a trust.

"Conversations with loved ones about inheritance can be challenging, but they are essential. Professional financial advice can provide invaluable guidance when it comes to inheritance and estate planning – offering tailored support in what can be a complex area."

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