In recent days, prominent think tank Resolution has called for a radical new system to replace the UK’s existing Inheritance Tax (IHT) regime, amid concerns that more needs to be done to tackle intergenerational inequality.
In a new report documenting ‘intergenerational unfairness’ across the UK, the think tank has described IHT as “by far Britain’s most unpopular tax,” despite only actually being levied on the largest four per cent of estates.
Under existing rules, IHT is incurred on all estates valued at £325,000 at a rate of 40 per cent.
But Resolution has said that the UK’s “unfit” IHT system should be scrapped altogether – and be replaced by a brand new ‘lifetime receipts tax’.
The new system would see the beneficiary of a Will inherit a lump sum before incurring any tax. Anyone who receives a bequest of this kind would then later be taxed on a person-by-person basis.
According to Resolution’s report, this new system would be ‘fairer’ and ‘more difficult to avoid’ – and would also encourage families to spread the wealth from an estate more widely among appropriate beneficiaries.
Adam Corlett, an Analyst at the think tank, said: “Inheritances are already worth over £100 billion a year, and their doubling over the next 20 years means they are going to play an even larger role in shaping British society. But the current system of IHT is not fit to deal with this societal shift. It currently manages the uniquely bad twin feat of being both wildly unpopular and raising very little revenue.”
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