A YouGov poll commissioned by law firm Kingsley Napley shows a majority of the British public (64%) favour raising the £325k threshold at which IHT must be paid and there continues to be strong opposition (69% of the public) to increasing the current 40% rate at which IHT is levied.
The research comes just weeks ahead of Rachel Reeves’ first Budget as Chancellor when it is widely expected she will raise taxes to help plug an alleged £22bn ‘black hole’ in public finances. She has repeatedly refused to rule out forthcoming IHT changes.
Apart from a fall in the number of those wanting the complete abolition of IHT, Kingsley Napley’s figures suggest there has been relatively little shift in public sentiment on inheritance tax. James Ward, Partner and Head of Private Client at Kingsley Napley, said:
“Speculation is rife that Rachel Reeves will introduce changes to the IHT regime on 30th October. However, I think the steps she will take will be more detailed than just simply altering the nil rate band or the tax levy rate.
She could look at removing the CGT uplift on death, for example, where there is currently a zero charge to Inheritance Tax, to remove the excess income exemption or to bring pension pots into estates for IHT purposes. She may target AIM shares and some agricultural reliefs. There have also been reports of her looking to remove the residence nil rate band exemption.
Although an increase in VAT or income tax would do far more to help plug the ‘black hole’, her manifesto has prevented her going down that route, so curbing exemptions around Inheritance Tax is one of the few options open to her. If she does incorporate suggestions such as these, she could yield up to £2bn in revenue according to IFS estimates.
And whilst increasing IHT overall remains unpopular across all voters and age groups, she could potentially justify changes that target wealth passing between generations on fairness grounds.”
