Prime Minister Rishi Sunak is contemplating tax revisions, including a possible elimination of inheritance tax (IHT).
The Treasury have confirmed that the Chancellor, Jeremy Hunt will deliver the 2024 Spring Budget on 6th March. The Spring Budget will include the government’s tax and spending plans plus new growth and borrowing forecasts. Online conversation suggests that this could be the last opportunity for the Conservative Government to announce any significant changes to tax policy before the general election.
Despite the Autumn Statement not revealing any changes to IHT, Sunak’s administration is now shifting gears to re-establish the Conservative reputation as the party of lower taxes. The suggested tax cuts, set to be detailed in the March Budget, include long-term mortgage support for first-time homebuyers and potentially the abolition of IHT, which critics label as “immoral” due to its double-taxation nature.
According to The Telegraph, the Treasury faces limited fiscal room and the potential economic uncertainties that could impact the feasibility of these ambitious tax reductions. Yet, with predictions of lower interest rates on government debt, there might be more flexibility than previously assumed. Ranil Jayawardena, a former Cabinet minister and the chairman of the Conservative Growth Group, told the Telegraph:
“Time is running out, and the Government needs to be bold. It’s time to axe the death tax. It’s a double tax, because it’s a tax on money which has already been taxed, and it piles on the pressure at the most sad and stressful of times. It is the least popular of taxes with people of all incomes because it is anti-aspirational, anti-family and is simply unfair. It needs to go.
Of course, the Government should seek to reform income tax to make it family-friendly too. Married couples and civil partners should have fully transferable income tax allowances, which would particularly help working-age parents with children when a family’s finances are tested the most. Let’s reward people who are trying to do the right thing.”
David Jones, a former Wales secretary, said that both income tax and inheritance tax “need to be cut”. He continued:
“Inheritance tax, in particular, should be abolished. It is an immoral tax on assets that have mostly been amassed out of taxed income. In my experience, it is arguably the most hated tax of all.”
What’s more, according to HMRC, IHT receipts for April 2023 to November 2023 were £5.2 billion, which is £0.4 billion higher than the same period last year. Lower receipts in April and May 2020 were due to a temporary issue where HMRC were unable to accept cheques for payment of IHT due to COVID-19, which was resolved, hence the peak in June 2020 receipts.
