Cut Inheritance Tax in this week's Spring Statement

Journalist: Sarah O'Grady, Daily Express

ended 20. March 2022

IHT is the UK's most unpopular tax and arguably the most unfair. A tax on homes already bought with taxed income and with the payment of Stamp Duty.  The Daily Express is publishing a piece calling on the Chancellor to raise the threshold at which it becomes payable in light of soaring property prices and row back on the five-year freeze he imposed. Am looking for comment from all kinds of property and financial experts who recognise the unfairness and think there's a better policy.

8 responses from the Newspage community

"IHT is perhaps the only optional tax in the UK. With some sound financial planning, it can easily be mitigated. However, with the sharp rise in property prices, especially in London and the Home Counties, you can understand why a growing number of people have come to see it as punitive and disproportionate. Rather than tinkering with tax bandings and levels, we should scrap IHT and council tax altogether and replace them with a land value tax that can then be levied and redistributed by area. From each area of the country according to its wealth and ability, to each according to its needs."
“IHT needs a review as much as the Government needs money via tax. With the average house price in many areas of the country rising above the threshold, it requires serious thought as it robs many people of a significant chunk of their inheritance. 40% of the value of a property is simply unfair and not right, all the more so given that more and more ordinary people are affected.”
"The problem's not that the Inheritance Tax threshold is too low, it's that house prices are too high. Personally I would make someone's main home completely exempt from Inheritance Tax. That seems fair. After all, many people have already seen their inheritance disappear thanks to sky-high care fees. To compensate, I'd charge a far higher rate of IHT on any additional properties left in an estate. We need to discourage second home buying. All it does is push property prices out of the reach of local people."
"Death and taxes, as the saying goes, are the only things in life we can’t avoid. Inheritance tax, however, is certainly the most toxic tax of all, the sting in the tail of the state. For most of us, the only thing we will inherit is our parents' house. But the irony is that, with inheritance tax, we need to pay the bill before we can claim the assets. Which means many will end up having to sell the house to pay the bill in the first place. We need to increase the nil-rate band with immediate effect or reduce the level of IHT. This would go a long way to helping the next generation get on the ladder because it seems like this generation is stuck on the ground. Generation Rent is weighed down with breeze blocks and IHT is one of them. "I can understand paying taxes on income. After all we get so many wonderful services in the UK that abroad would either be worse or payable, possibly both. It’s still amazing that even with the delays we can walk into the doctor or hospital and get treated for free. I know that part of my income tax goes to that and that's fine. It certainly doesn’t seem to go into the roads around me though. "It’s bad enough having a lifetime allowance on pensions where, after £1,073,100, you pay 25% on any excess drawn as income and 55% on any excess taken as a lump sum. Now in this case people at least get tax relief going in, so they are given some breathing room to put savings away. While our pensions are out of estate for inheritance tax purposes, and the first £1m or so in prime residence value (if you’re married and have both of your brackets available), our savings aren’t. Which is funny really, as to have savings in the first place, we either saved from our income, or used the income to make investments which had gains, where we potentially had capital gains to pay at the time, and now just to slap us when we’re heading into the ground they tax anything we have left over at 40%."
"Honest people work hard their whole lives. They pay income tax on their earnings, VAT on their shopping, Stamp Duty on their homes. They pay Insurance Premium Tax on their car insurance. The list goes on. Then to add insult to injury, they die and their loved ones have to pay Inheritance Tax on everything they have built up, and paid taxes on, during their lives. This is simply outrageous. Things need to change. The threshold has not increased since 2009 yet house price inflation has been massive since then. The better policy is do not charge Inheritance Tax at all. Tax has been paid on the money already, it is deeply unfair to tax it again."
"Nobody likes to pay tax, but we all accept it is necessary to run our most important services that set the UK apart from many other countries. However, what we do want is for any taxes to be fair and that cannot be said about IHT, especially when it comes on your home that you worked hard to buy, keep and maintain. This is all paid for out of already taxed income with tax paid on purchase in the form of stamp duty. To then charge another whopping lump sum on death really takes the biscuit. This is especially true when it seems to be the case that wealthy people can afford advice and structures to avoid IHT whilst the average person cannot. This causes family issues and makes it harder for the next generation of buyers to get into a property market drifting out of reach of many. IHT on a main residence should be scrapped outright, and surely a modern Government will find other ways to raise the money needed in a fairer, more equitable way."
"IHT is a form of double taxation and one that needs a radical overhaul. The system is too complex for starters and there should be a £1,000,000 plus nil rate band and just scrap the residence nil rate band entirely, as most "normal" estates that pay IHT is due to their property's value anyway. If you look at countries such as Italy where spouses and children only pay 4% above an E1,000,000 exemption, or in the USA where the nil rate band is over $12,000,000, it provides further evidence that we have a very penal and expensive death tax. "All of us want to make sure that our hard work and wealth creation gets passed onto our loved ones so they can have much needed financial stability for their futures. Remember, there are no final salary pensions anymore and you need lots of money to buy a house these days. I constantly think about the help we'll have to give my five year old in the future to pay for university and buy a home. It then feels unfair that we get penalised on our demise despite doing all the right things during our lifetimes. "We either need to see a much higher and simplified nil rate band (£2,000,000 per estate) or a reduced percentage to be paid to HMRC (say 20% instead of 40%), which allows families with two or more children to not have their inheritance diluted down and an awful situation where the Government receives more than the children."
“IHT is a tough tax to bear but the government needs money. As it could be described as a tax that does not actually affect direct income, it could be considered a good way to raise that money. However, 130 of the 332 Local Authorities have an average house price value above the IHT threshold of £325k. 74 Local Authorities have an average house price of more than £400k, which is way too many to be hit by IHT, which in the past has been know as a tax for the relatively wealthy. The current threshold needs to be well above the national house price average for most areas before it robs the inheritors of 40% of the value of their property.”