False Promises On Inheritance Tax
The amount of inheritance tax expected to be paid by UK families in the next few years will reach the highest level for many years, according to calculations by the Institute for Fiscal Studies.
The institute found that if the current inheritance tax system remained in force, receipts would reach a 45-year high in four years’ time, by 2018. The research was focused on the amount of inheritance tax raised as an overall proportion of total tax income, going back as far as records were easily obtainable.
The IFS added that the numbers of those paying IHT were also poised to quadruple, from just 2.6pc of those dying in the 2009-10 tax year to 10pc in 2018-19 (the red line, above). The increased tax take derives from growth in the economy but primarily from the predicted rise in house prices.
The research forecasts one in 10 estates will be liable for IHT within the next Parliament. Much of the payments would be paid by those living in the expensive regions of London and the South East, the IFS predicted.
The Conservative party have a history of promising inheritance tax breaks which subsequently fail to be implemented. In November 1996, the then Chancellor Ken Clarke said: “This Government is committed to reducing and then abolishing capital gains tax and inheritance tax.” That was the Budget in which he increased the IHT threshold to £215,000. David Cameron also while in opposition promised an increase in the threshold to £1 million which also never materialised once they came to power.
Inheritance tax can be fully eliminated with sensible planning early enough depending upon a person’s overall assets.