4th December 2015
Unfair inheritance tax (IHT) is ‘too toxic to save’, according to think tank the Fabian Society.
It has conducted research that reveals the public believe the 40% IHT levied on estates over £325,000 is ‘illegitimate and unfair’ and that the negative connotations the tax brings up run too deep to make the system keeping.
Instead, the think tank proposed a new income tax on gifts and bequests.
In an interview with the Guardian, Fabian Society general secretary Andrew Harrop, said the findings were ‘really surprising’ and that IHT required fundamental reform in order to win support.
‘The public see the value of the tax system, and they want it to be fairer, simpler and more progressive,’ he said.
‘But some taxes are now beyond the pale, even for people who are supportive of progressive measures. Inheritance tax is seen as unfair and insensitive even by left-leaning voters, and has become too toxic to save.’
The government has already gone same way to reforming IHT, introducing a residential nil rate band incrementally up until 2020 when homes worth up to £1 million will be removed from IHT totally.
The findings from research also found support for broader taxation of wealth generally but hostility towards IHT persisted regardless of age, income bracket, or voting history.
Most people saw IHT as a double taxation and were critical that tax was levied at a time of distress.
‘On the whole, the focus group participants argued for wealth to be more fully taxed,’ said the report.
‘But they were almost unanimously opposed to taxation of inheritance, regardless of their political views. Their arguments were striking, emotive and mostly unequivocal. These discussions were excellent examples of how people are able to hold fundamentally contradictory views simultaneously. People believe that wealth should be taxed and inequalities of wealth reduced, but inherited wealth should not be touched.’