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Chancellor of the Exchequer Sajid Javid has said he would consider scrapping Inheritance Tax in its current form.
Speaking to the Conservative Party Conference last week, Mr Javid said: “I shouldn’t say too much now, but I understand the arguments against that tax. You pay taxes already through work or through investments and your capital gains in other taxes, there is a real issue with then asking them to, on that income, to pay taxes all over again.”
His comments have received support from some leading figures in the UK tax sector, Accountancy Age magazine reports.
Miles Dean, head of International Tax at Andersen Tax UK, said: “The chancellor is right to consider scrapping inheritance tax. It is difficult to justify that assets acquired using taxed income are then taxed again on death.”
The standard inheritance tax rate is 40 per cent, with the individual inheriting having to pay tax on that part of the estate above the £325,000 threshold.
Mr Dean added: “Reducing the rate to something like 10% over an increased nil-rate band threshold could also be a solution, if there were good arguments against abolishing the tax altogether.
“Unfortunately, it’s a double-edged sword. Tax is divisive and inheritance tax more so than any other. The Left say inheritance tax should be increased substantially and that there are too many exemptions whilst the Right appear to want to reduce it. The chancellor is therefore damned if he does and damned if he doesn’t.”
Inheritance Tax netted a record £5.4bn for the government last year, but still affects less than 6 per cent of deaths annually.
Kyra Motley, partner at law firm Boodle Hatfield, commented: “The IHT threshold has stood at £325,000 for over a decade, creating substantial so-called fiscal drag and when this is combined with rising property prices, more hard-working middle-class families, who not really regard themselves as being particularly wealthy, are being affected by this tax. There is a strong argument for the Government to seriously consider increasing the threshold.”