Thursday, August 30, 2007

Inheritance Tax

Just briefly, one of the things that irritates me about the coverage of Inheritance Tax is nicely illustrated in a piece by Seumas Milne, of awful aspect.
The determination to slash a mildly progressive tax which catches only 6% of estates and could by no stretch of the imagination be said to affect middle England speaks volumes about what Cameron's social justice agenda is likely to mean in practice.
Although currently only about 6% of estates are hit by Inheritance Tax, this is irrelevant. In the 'hit by a bus' scenario that has to drive personal tax planning in this field, about 34% of the population would be caught by Inheritance Tax. Saying, 'don't worry, by the time you're likely to die, you won't have as much money' isn't terribly reassuring. IHT raises comparitively little money at the cost of a lot of heartache and complex financial planning. Abolishing it would not merely benefit the elderly in immediate contemplation of bequeathing their estates, but also the healthy who are not inclined to leave it to luck that they don't walk under a taxi on the way to work.

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2 Comments:

Anonymous Sam said...

The 6% number is rather misleading, too, no? Most people are married, and pass their estate to their spouse free of IHT. "6% of estates pay IHT" actually means closer to "12% of families pay IHT".

4:19 pm  
Blogger Tim J said...

Also true - but 6% just sounds so perfectly low that it can be wheeled out again and again without being challenged.

5:51 pm  

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