Calls have been made for an ‘unfit’ Inheritance Tax (IHT) system to be overhauled and replaced.
The Resolution Foundation, a thinktank dedicated to the improvement of living standards, makes the appeal in its latest report on tackling intergenerational inequality. It claims that Inheritance Tax is considered by the public to be most unfair of all taxes, despite it only being levied against the largest 4 per cent of estates.
In its place, the thinktank suggests a ‘lifetime receipts tax’, a ‘fairer’ system that would be more difficult to avoid. This would let a beneficiary of a Will inherit a lump sum before any tax was paid on it. At present, tax is paid on the value of the estate above £325,000, before any bequests are made.
The report says that taxing the individual recipients would also encourage the wealth from an estate to be spread more widely among beneficiaries.
The report comes in the wake of both the Chancellor of the Exchequer’s call for a review into Inheritance Tax earlier this year, and the news this week that the Office of Tax Simplification is inviting feedback on IHT via views from the public and professionals, along with an online survey.
Commenting on the report, the Resolution Foundation’s chief executive, Adam Corlett, said: “Inheritances are already worth over £100 billion a year, and their doubling over the next 20 years means they are going to play an even larger role in shaping British society.
“But the current system of inheritance tax is not fit to deal with this societal shift. It currently manages the uniquely bad twin feat of being both wildly unpopular and raising very little revenue.”
The report goes on to warn that avoidance of IHT is made easier by certain tax exemptions, such as those on capital tied up in agricultural land. The foundation says that although these reliefs were originally meant to ensure farmers did not have to break up their estates, they were now being used to avoid the payment of Inheritance Tax.
MFG Solicitors’ Private Client team can assist in any matters relating to Inheritance Tax. Our experts also advise on any other corresponding aspects of law. For more information, contact us today.
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