Inheritance tax receipts soar

ASSISTANT POLITICAL EDITOR BRITONS will pay almost £2 billion more in inheritance tax over the next five years than previously thought, official estimates have revealed.

The Office of Budget Responsibility (OBR) believes the Treasury will take in £1.8billion more than forecast last November.

The change was buried in the body’s twice-yearly analysis of the economy released this week alongside the Budget. Rising house prices and a booming stock market were named as the cause of the increased tax haul.

Critics jumped on the revelation to renew calls for the “most hated tax” to be scrapped by taking advantage of the Tories’ majority in the House of Commons. Inheritance tax is levied on property and financial gifts that are passed on when someone dies, with 40 per cent being the standard rate.

George Osborne and David Cameron put a promise to lower inheritance tax at the heart of the Conservatives’ 2015 election pitch to middle England.

The pair said they would ensure that homes and other assets worth up to £1 million could be given tax-free to younger generations. But despite the pledge being implemented from this April, the OBR now expects revenue generated from inheritance tax to soar from an estimated £4.7billion in 201617 to £6.2billion in 2021-22

This is an increase of around a third and means inheritance tax receipts are predicted to be £1.8 billion higher across the period compared to the earlier forecast.

Paul Johnson, director of the Institute For Fiscal Studies, put the rise in receipts down to a growing economy.

“Clearly the stock market has risen. To the extent that there are any shares being inherited, that is going to have an effect,” he said. “But I assume housing must be driving a lot of it because that is a high fraction of what is inherited.”

Dia Chakravarty, the TaxPayers’ Alliance political director, said: “It is the most hated tax for a good reason and needs to be scrapped immediately.”