UK Inheritance Tax Payments Rise by 10%

UK savers are facing a significant increase in income tax contributions from savings interest, with estimates suggesting they will pay £10.4 billion this tax year, marking a nearly sixfold rise since the pandemic's lowest point. This surge is attributed to higher interest rates and frozen tax thresholds, leading to an increase in the proportion of income tax derived from savings interest from 0.61% to 3.45% since 2021. Meanwhile, projections indicate that Britain's tax burden will rise more than any other major G7 economy, reaching 39.3% of GDP by 2029, primarily due to anticipated budgetary measures by Chancellor Rachel Reeves to address a £40 billion funding gap. Reeves is expected to introduce substantial tax changes in the upcoming budget, including a potential inheritance tax on pensions, which could lead to double taxation for families. Inheritance tax receipts have already increased by 10% this financial year, prompting concerns that middle-class homeowners will be disproportionately affected by any tax hikes. As fiscal policies evolve, the impact on various demographics highlights the ongoing challenges within the UK's tax landscape.