The government has made a few tax cuts, specifically abolishing Stamp Duty on properties worth up to £300,000. With many opponents to the idea, should Inheritance Tax (IHT) be the next target for cuts?
Here are five reasons why we think IHT doesn’t work in its current format:
1. It does nothing to tackle inequality
A recent article from The Times says that not only does IHT fail to beat inequality, it actually further cements it. A poorer family can be hugely impacted by even a small amount of inheritance tax, and it can adversely affect their day-to-day living standards. By solely looking at the fortunes of the 1% in the UK, the fact that inheritance spreads wealth in a positive way, rather than concentrating it in one level of society.
2. It’s morally suspect to tax people after they die
IHT is a major government policy of the 21st century so far, and many feel it’s unjust to tax people after they are dead. Most people work long and hard, pay tax all their lives and there is a strong feeling that continuing to penalise their families even after they die is just not the right thing to do.
This tax hits people when they’re at their most vulnerable and is an extra hardship for many middle to low income families at the hardest time of their life.
3. IHT puts the UK behind progress
Even in countries that enjoy general prosperity, high levels of social mobility and a positive economic outlook, such as Norway and Sweden, IHT has been abolished. The UK is lagging behind in this area, and should take its lead from countries that have proven success with public services and general social wellbeing.
4. Inheritance tax complicates the tax code
According to a representative from the Taxpayers’ Alliance, while IHT is just 1% of government revenue, it makes up 10% of the UK’s already over-complicated tax code.
5. It affects the middle class the most
IHT is ostensibly targeted at the very rich in our country – the 1%. These are the people who can afford the very best accountants and tax plans to minimise how much IHT affects them and their heirs. It’s the middle classes who are hit hardest by the negative repercussions of IHT, even though they have a much stronger need to pass money on to the next generation.
