A former tax inspector has suggested a new policy that could replace inheritance tax, potentially lifting millions of people out of the tax bracket. Stefan Fielding, who now works as a tax director at Sapphire, an accounting firm, believes the “divisive” tax could be changed or even removed in the next few years. He thinks these changes might be announced in the upcoming Spring Budget.
Speaking to Express.co.uk, he said: “Some argue that a wealth tax would result in a fairer redistribution of wealth and place the responsibility on the owners of valuable assets, rather than the beneficiaries of their wills. While it’s easy to see why a wealth tax might be a good idea, the reality is that it would be complicated to manage and would likely put a lot of pressure on HMRC to monitor it.
“A wealth tax would also cause a lot of extra work for asset owners who would need to produce annual valuations of their assets which is costly, both in terms of time and money.” Birmingham Live reports that Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money. The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the tax-free threshold which is currently £325,000.
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He further explained: “On top of this, some assets are inherently difficult to value. Shares in owner-managed businesses, fine art and high-end property can be difficult to value and an element of subjective judgement is required.” He suggested: “The most probable way that inheritance tax may be reformed is by increasing the thresholds at which inheritance tax is paid. The tax-free threshold is currently £325,000 (increasing to £500,000 if you own your own home).
“Increasing these thresholds will lift a great number of people out of the inheritance tax bracket, and this may be a better compromise than scrapping it all together. It would be warmly received by those whose estates would no longer be subject to inheritance tax, whilst preventing the political backlash that would likely accompany eradicating inheritance tax in its entirety.”
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