Inheritance tax (IHT) is the most hated tax in the UK, even among socio-economic groups unlikely to ever be liable to pay it. It goes against the most basic human instinct – to want to pass something on to one’s children – and has been abolished in many countries including the egalitarian’s paradise, Sweden.
Levied on estates that have been built up out of the proceeds of income which has already been taxed, often several times over, it hits families at the worst possible time – after a bereavement. IHT raises less than 1 per cent of government revenues but accounts for more than 10 per cent of the tax code, with exemptions for agricultural land, business assets and woodland creating distortions devoid of economic rationale.
This government’s introduction of a ludicrous £175,000 additional transferrable “residential nil rate band” will only make things worse. This is an immoral tax that raises little revenue and significantly complicates the tax code. Hopefully we’re hearing the death knell of the death tax.