Inheritance tax could be in Rishi Sunak’s firing line: ‘Need to find more money’
Inheritance tax labelled ‘unfair’ and ‘cruel’ by expert
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Chancellor Rishi Sunak is considering a hike on inheritance tax, reports have claimed in recent months as the UK looks to bounce back from the pandemic. In May, sources said Mr Sunak is “moving towards” a rise in inheritance tax as part of a raft of tax hikes to help pay the near £400billion Covid bill. The i newspaper spoke to Treasury figures who said the Chancellor is “minded” to target people’s estates and wealth to raise funds.
They said in May: “It is something the Chancellor is minded to do and is moving towards, but the timing remains uncertain.”
The Treasury currently collects £5.3billion a year from inheritance tax. Analysis from tax and advisory firm Blick Rothenberg shows that a one percent rise would raise around £130million extra a year, while a 5 percent increase would bring in an additional £650million.
Pension expert at Aegon, Steve Cameron, told Express.co.uk that inheritance tax hikes or reforms could be used to help pay for the UK’s social care.
He said: “I think reform on wealth taxes shouldn’t be discounted. I think this issue is likely to come back alongside proposals around social care funding.
“I think there is a general acceptance that we need a sustainable approach to funding social care.
“Once the Government comes up with proposals, it is highly likely that they will need to find more money, and you have to raise that from somewhere. Taxation is clearly one way of doing so.
“Rather than taxing a 20-year-old on their income to pay for social care for a 90-year-old who has their own house, it might be that inheritance tax could be a source of income.
“It wouldn’t be the most popular choice, a number of people really hate inheritance tax, but on the other hand, it is about this fairness point.
“It’s about is this a way of generating money to give the elderly a dignified later life with the care that they need.”
Resolution Foundation published a report in January which revealed that almost £800billion of assets held by Britain’s richest households had been missed by official measures.
The data also uncovered a significant increase in wealth inequality, with a rise of the top one percent of households’ share of total wealth by over a quarter – from 18 to 23 percent.
Chief Economist at Resolution Foundation, Jack Leslie, told Express.co.uk in March that the Government should reform wealth taxes in order to raise funds.
He said: “The Government should fix the system that it has, make it fairer, and close the loopholes.
“You could raise billions without touching the headline rates, fixing the current system is a better approach than trying to introduce a whole new wealth tax.
“One of the really big trends in the economy over the last 30 years is that the overall value of the wealth people hold is worth around twice what it was 30 years ago.
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“But at the same time, taxes on wealth has stayed completely flat, so we are essentially taxing wealth half as much as we used to.
“That doesn’t seem to make much sense given we might need to find more money after this crisis, and wealthy people can probably afford to pay more.
“It makes sense that the people who are less likely to have lost their jobs and faced health risks, it does make sense that wealthy people can should pay more in the future.”
The Office of Tax Simplification published a report in November, commissioned by the Chancellor, that suggested wealth taxes including capital gains could be used to recoup funds.
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