UK inheritance tax plans ‘half-baked and half-hearted’

The Chancellor of the Exchequer’s plans to cut inheritance tax that will be announced next week have been branded as ‘half-baked and half-hearted’ by the CEO of a leading independent financial advisory and fintech.

The UK’s Finance Minister Jeremy Hunt is expected to use the Autumn Statement to slash what is often described as the most hated of all taxes.

He is also coming under increasing pressure from Conservative MPs to deliver some tax cuts for voters ahead of next year’s general election and put some clear dividing lines between them and the opposition Labour.

“Jeremy Hunt’s reported move to cut inheritance tax by 10 percentage points is a half-baked, half-hearted attempt to woo voters,” quipped Nigel Green of deVere Group.

“What he should be doing is abolishing the most despised tax completely.”

IHT is often dubbed the most loathed of all taxation, as frozen tax thresholds and an incredibly high rate of 40% place more and more ordinary families at risk of being taxed.

The number of homes facing the IHT burden has more than doubled since 2010, despite it being designed as a tax for only the super wealthy, and around 40% of homes sold in England and Wales in 2022 were worth more than the basic allowance.

Affecting middle class

“IHT is clearly no longer limited to the ultra-wealthy, as initially intended. It is increasingly affecting middle-class families whose primary asset is their family home,” remarked Green.

“The desire to leave a legacy for loved ones is a deeply ingrained human instinct, and individuals find the IHT particularly objectionable as it essentially constitutes double taxation — taxation on assets that have already been paid for and taxed before.”

In a recent survey conducted by deVere Group in May, some 72% of individuals aged 50 and above with taxable assets said they were unaware that the IHT threshold stood at £325,000.

“It’s disconcerting that those with assets susceptible to IHT lack understanding about the potential implications. This lack of awareness puts these individuals’ families at risk of facing an unexpected and potentially significant tax burden upon the death of a loved one.

“It is even more troubling given the strong sentiments people have against inheritance tax, detesting the notion of their already taxed money being subjected to further taxation.”

Of the recent reports of a reduction in inheritance tax, the deVere CEO concluded that, “this is a weak plan.

“Scrapping inheritance tax once and for all would not only be the right thing to do, but also an historic, popular votewinning strategy.”