On the 12 March 2017, The Daily Telegraph reported “£2bn more to be paid in inheritance tax than previously thought as house prices soar”
The newspaper reported that Britons will pay almost £2 billion more in inheritance tax over the next five years than previously estimated. The Office of Budget Responsibility (OBR) believes the Treasury will take in £1.8 billion more than was forecast last November the numbers was included in the twice-yearly analysis of the economy released this week with the Budget.
The article reminds us that David Cameron’s election pledge “We will take the family home out of inheritance tax. That home that you have worked and saved for belongs to you and your family – you should be able to pass it onto your children.
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 promised to ensure that homes and other assets worth up to £1 million could be given entirely tax-free to younger generations. Mr Cameron said at the time: “We will take the family home out of inheritance tax. That home that you have worked and saved for belongs to you and your family – you should be able to pass it onto your children and with the Conservatives, the tax man will not get his hands on it.”
Rising house prices and a booming stock market were named as the causes of the increased tax haul, with the economy growing quicker than expected. Despite implementing the changes, revenue generated for the Treasury from inheritance tax is still set to soar across the coming years. It will rise from an estimated £4.7 billion in 2016/17 to £6.2 billion in 2021/22 – an increase of around a third. Furthermore, when those forecasts are compared to ones made just last November they are £1.8 billion higher across the period.
“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. “Inflation is a bit higher and the inheritance rate threshold is fixed so that would help. Obviously anyone who has assets overseas they are worth more in pounds terms, I don’t know if that [is having an impact]. But I assume housing must be driving a lot of it because that is a very high fraction of what is inherited.”
Critics jumped on the revelation to renew calls for the “most hated tax” to be scrapped given the Tories enjoy a majority in the House of Commons. Dia Chakravarty, political director at the TaxPayers’ Alliance, said: “Inheritance tax is a terrible tax which hits grieving families at the worst possible time and punishes the very basic human instinct of wanting to leave something behind for one’s loved ones. It is the most hated tax for a good reason and needs to be scrapped immediately.”
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