Feb 2013 13

The Government have announced that, instead of increasing the threshold for Inheritance Tax to £1 million as they promised, the threshold will be frozen. That will mean more and more people paying unfair death duties, on money that has already been taxed. Allister Heath wrote for the Daily Telegraph this morning about the economic damage done by Inheritance Tax. The final report of the 2020 Tax Commission looked at why the tax is so unfair and unpopular.

Matthew was the Chief Executive of the TaxPayers' Alliance, author of Let Them Eat Carbon and editor of How to Cut Public Spending (and still win an election)

  • blarg1987

    Hmmm, it is a difficult one but to play devils advocate, generally speaking those who already have wealth are more easily avilable to obtain more wealth so lets extend this to wider society, will this really ebenefit the majority of society or minority? Or will this lead to a larger divide in society as those who want to achieve i.e. buy a house and succeed find it harder e.g. people with wealth buying up all the houses forcing the price up.

  • JParty

    I disagree complete blarg1987 – wealth redistribution is brought about by Income tax – that’s the purpose of it – redistribute Income from those with lots, to those with little or none.

    Death taxes are not necessary at all, and are unfair.

    An estate can be taxed using the standard capital gains rules, by saying that upon death, everything is treated as disposed. Therefore capital gains is paid on unearnt gains on multiple properties, investments ie. the things which have not been taxed in the lifetime but would have been if sold prior to death.

    Anything which would not have a capital gain in life (i.e property you live in) would be exempt whatever it’s value.

    This would simply the whole system and more importantly, prevent the very wealthy from avoiding IHT using accountant and Trustfunds.

  • JParty

    p.s. If you want a wealth tax (the way to redistribute wealth, not income), then it should be on everyone, not just the dead. Personally I hate the idea of a wealth tax, as over time it’ll become a tax on ordinary people and their non-liquid assets (such as your wealth is all in the house you live in). There are other existing more effective ways of getting tax out of wealthy people than introducing an additional complication to the system (and paying accountants again to find one of the many loopholes that will inevitably exist for the truly wealthy, such as holding wealth offshore in ficticious holding companies in the Caribbean.)

  • tinamac

    as an un wealthy person, I loath the thought of taxing for anything other than basic education and health – why should my non working relatives get grants for their children for example – as soon as they lay their hands on the money, they will squander it in the same way they squander the very good amount of money their parents get now

  • ockcim1

    more and more people paying unfair death duties on money that has already been taxed.The TPA is been very economical with the truth here.The latest figures i can find show around 12000 people paid inheritance tax at the current threshold in 2011 and according to HMRC estimates this figure is likely to fall year on year with the fall in property prices and the current economic climate.Could it be the TPA are once again working to their own agenda representing their own backers interests and somehow claiming the average man on the street is affected by this tax.