Inheritance tax: Rishi Sunak has been ordered to reduce the rate of this “very unpopular” tax to 10%.
A Tory backbencher told Rishi Sunak that inheritance tax rates should be cut to 10%, amid rumors that the Chancellor of the Exchequer is mulling a raise.
Last week, it was revealed that inheritance tax revenue increased by £190 million in the most recent tax year compared to the previous year. This was a 4% increase over the previous year, bringing the total amount paid in inheritance bills to £5.4 billion in 2020-2021. Thanks to rising Covid-19 deaths, soaring property prices, and a five-year freeze in tax protections announced in the March Budget, the tax haul is anticipated to hit an all-time high of £6 billion next year.
If Chancellor of the Exchequer Rishi Sunak decides to amend a variety of wealth tax regulations, he might gain more money.
In May, a Treasury source said that raising inheritance tax would be a “politically smart decision” since it would not disproportionately affect low-income households and could be characterized as a wealth tax.
“It is something the Chancellor is minded to do and is working towards,” the insider told the I daily, “but the timing remains uncertain.”
However, following the March Budget earlier this year, a Tory MP recommended Mr Sunak to reduce the percentage of inheritance tax paid from 40% to as low as 10%.
The tax, according to Conservative MP John Stevenson, is “extremely unpopular” and needs “serious change” to make it more equitable.
“A considerably lower rate of something in the area of 10% would discourage avoidance,” he continued. Combining this with the elimination of a lot of the more complicated ways to avoid the levy might raise the same amount [as the threshold freeze], if not more.”
The ordinary inheritance tax rate is 40%, although it is only applied to the portion of your estate that exceeds the £325,000 level.
There are also various legitimate strategies to lower your bill. To lessen the value of your overall wealth, you can use the annual £3,000 giving allowance or the unlimited £250 small gift allowance.
On their wedding day, parents can give their offspring £5,000 in tax-free presents, while grandparents can contribute £2,500.
Last month, Aegon’s pensions head, Steve Cameron, told This website that inheritance tax hikes or reforms could be in the works. “Brinkwire News in Condensed Form.”