Jeremy Hunt is expected to outline a series of tax cuts in today’s Autumn Statement, but will that include the inheritance levy?
With inheritance tax (IHT) receipts on track for record high, the chancellor is facing growing pressure to reduce the burden.
The Treasury is on course to secure a record inheritance tax take this year, the latest figures suggest.
HMRC’s latest update show that £4.6bn was collected through the first seven months of the 2023/24 financial year (April to October), up 12% on the £4.1bn collected during the corresponding period last year.
It is estimated that at the current rate of tax collection, IHT will raise over £7.8bn for the Treasury – £700m more than last year’s all-time high of £7.1bn.
Stephen Lowe, group communications director at retirement specialist Just Group, said: “Only a very small proportion of households are impacted by IHT, but the tax continues to raise more revenue for the government, so it bites deep on those estates affected.
“Our research suggests there is a low level of understanding around the inheritance tax rules and thresholds, with the majority unaware of how much their estate must be worth to incur a tax charge.”
According to research from Just Group, 59% of retirees over 55 do not know what the threshold is for the value of an estate to pay IHT and a further 50% of this age group do not have a clear understanding of the rules.
But while all eyes are now on whether IHT will get a mention in the chancellor’s Autumn Statement today, Jasmine Birtles, TV and radio financial commentator and founder of MoneyMagpie.com., believes the chancellor should forget about a IHT cut.
Looking ahead to today’s Autumn Statement, she said: “I’m pretty sick of hearing the government talk about cutting or abolishing inheritance tax. Yes it’s an unfair tax but all taxes are unfair! Inheritance tax affects less than 4% of estates. So sure, raise the threshold so that fewer people are caught in the net just because their property happened to skyrocket in value over the last few years.
“But cutting inheritance tax won’t help the majority of people in the country and it won’t help to kick-start our economy.
“The taxes that need addressing are VAT and income tax. Lowering those will help individuals and businesses cope in the next few years. We are staring down the barrel of a recession and we badly need tax-cuts to increase productivity and boost businesses – particularly small businesses.
“If I had to pick one tax to cut it would be income tax, and my social media followers agree. Raising the income tax threshold would help millions of lower-paid workers who desperately need the extra cash to pay bills. It would also increase productivity as people tend to work harder when they know they can keep more of their money and, therefore, it would be likely to increase overall tax-take for the government.
“At the same time, I would increase the threshold for paying VAT from 85K to £150K so that more small businesses that deal with retail customers only can bring their prices down. Again, bringing down prices on a day-to-day basis would increase sales and reduce business closures – particularly on the high street. This should also increase the overall tax take for the government,
“The Tories are supposed to be the party of low taxation but we haven’t seen evidence of that for years. It’s time they went back to their roots – while they still have time – and gave the people of the UK a break – a tax break!”
