Bereaved families will face higher charges for late payments of inheritance tax from next month.
HM Revenue and Customs (HMRC) is increasing the interest rate payable on late inheritance tax bills to 3% while cutting the rate it pays in interest when it returns overpayments.
Campaigners condemned the desperate'' move as an attempt to feed the Government's addiction to debt, tax and spend'' and said it was unjustifiable'' during a recession.
The plan, revealed by a London-based newspaper, will come into force in September.
Following the death of a family member with an estate worth more than £325,000, relatives must pay tax within six months on a proportion of the money and property left to them.
From September, late payments will be charged at 2.5 percentage points above the Bank of England's historic low interest rate of 0.5%.
Meanwhile, the interest HMRC pays on refunds will be pegged at one percentage point below the Bank's rate, but this will not go beneath a floor of 0.5%.
An HMRC spokesman said: Interest is not a penalty but compensation for tax paid late. We are streamlining the rates charged and paid for interest to simplify and make things fairer for customers.
This has been subject to extensive consultation over the last 18 months and has been largely welcomed by customer groups and their representatives.
The alignment of rates that will take place in September will mean all tax paid late is subject to interest at the same rate, so ensuring all taxpayers are treated equally.'' But Susie Squire, political director of the Taxpayers' Alliance, said: I think it's a desperate move and a seriously retrograde step for the Government. It's basically one rule for them and another for everyone else.'' She said the decision was more about political point-scoring rather than raising any significant revenue'' and added it was feeding the Government's addiction to debt, tax and spend. It seems to me to be very unequal and unfair.'
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