Taxing inheritance leaves everyone poorer
- On August 2, 2023
- By GrowthInvest Marketing
Inheritance tax is pernicious and unfair. But most disgracefully, it barely raises any revenue, contributing just £7 billion, less than 1 per cent of government revenues. This comes with high compliance and enforcement costs – not to mention the significant opportunity costs, with families forced to spend on tax planning, wasting the time of skilled lawyers and accountants who could be better employed doing other tasks.
It was sold as being highly progressive, with relatively few forced to pay, but soaring inflation and stubbornly high house prices, combined with frozen tax thresholds, are dragging more families into the net. The tax does not kick in in the US until an estate is valued at more than $12.92 million (£10 million). In the UK, it can be imposed from as low as £500,000 – and that threshold is scheduled to be frozen for years.
HMRC forecasts, revealed in these pages today, suggest that 49,400 more estates will be paying inheritance tax over the coming years due to frozen thresholds. This is many more than the Office for Budget Responsibility’s estimate of 13,400 more estates earlier this year. Overall, 283,400 families will pay inheritance tax up till 2027-28, according to HMRC.
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