Friday June 30, 2023
According to Today’s Wills & Probate – A prominent economic think tank has urged the government to move from a flat rate of inheritance tax (IHT) towards a progressive rate structure.
Here’s the excerpt from that survey:
The Resolution Foundation – which also suggested that IHT should be tightened so that it cannot be avoided by the “wealthy and well-advised” – pointed out that the UK’s estate taxes pre-1988 did in fact have progressive rate structures, and that such formats are more common in other jurisdictions than flat rates.
Specifically, they suggest a 20% band for value between £650,000 and £1 million (for couples), as well as a 30% band up to £1.5 million. Even at £1.5 million, the effective tax rate would be only 15% – something the Resolution Foundation argues would assure voters.
Their report, Tax Planning: How to match higher taxes with better taxes, also suggested that business and agricultural property reliefs “should be scrapped or heavily restricted”, which they say are concentrated among a small number of estates and are a key cause of the fact that the effective rate paid on estates worth over £10 million is, at 10%, far lower than the rate paid by smaller estates.
The Resolution Foundation also recommends taxing inherited pension pots, which it says “if not used to purchase an annuity, are not fundamentally different from any other savings pot”.
Read more HERE.