Ahead of the Spring Budget, probate brokerage firm Final Duties suggests that eliminating inheritance tax could be a strategic move for the Chancellor, as reported by Propertywire.
This action is seen as a potential appeal to Conservative voters and would cut less than 1% from total tax revenues. According to Final Duties, axing the tax could save UK taxpayers around £5 billion annually. Jack Gill, managing director of Final Duties, told Propertywire:
“As the general election gets closer, the government will be keen to make a splash with a headline statement designed to win favour ahead of the next election. Having already shied away from a proposed 99% mortgage policy, it seems that abolishing inheritance tax might be the best trick they have up their sleeve.
The reason such a policy might work is because it appears, on the surface, to be a generous tax break at a time when so many are struggling financially. It also appeals to the Tory stronghold with whom the idea of being taxed on the assets you have gained through a lifetime of hard work doesn’t sit well.
However, it’s fair to say that abolishing inheritance tax isn’t actually that big of a carrot to dangle in front of soon-to-be voters, accounting as it does for such a small slice of the tax pie.
It’s also fair to say that it would make very little difference for the majority of people because, as was recently reported, only 4% of estates in the UK are actually subjected to inheritance tax. So if an abolishment does make a difference, it will only be for the most wealthy corners of society.”
The total inheritance tax collected in the fiscal year 2020-21 was £5.1 billion, showing an increase from £2.6 billion in 2010-11. Factors like rising house prices have contributed to this growth, pushing more estates over the taxable threshold. Notably, the tax increase has been most pronounced in the North East and other regions of England.
