One of the UK’s leading tax preparation specialists joined calls for a complete overhaul of the system for Inheritance Tax. David Redfern, founder of DSR Tax Refunds, added his support to the report from the Resolution Foundation thinktank, which calls for a radical overhaul of the Inheritance Tax (IHT) system, released yesterday. Redfern stated that Inheritance Tax was one of several areas of taxation legislation that needed to be re-evaluated to bring it in line with changes in modern living and working.
The Resolution Foundation proposal suggests scrapping Inheritance Tax, which is levied on estates worth over £325,000, and replacing it with a ‘lifetime receipts tax’. The current system is considered to be very unpopular with the public, yet nets very little tax revenue, with only 77p per £100 of taxation coming from Inheritance Tax. The proposal suggests a lifetime receipts limit of £125,000 per individual, with a tax rate of 20% up to £500K and 30% thereafter. This would allow recipients of a deceased’s estate to receive an untaxed lump sum and would move the tax burden away from the estate. Redfern stated that “not only is the current system greatly disliked by the public, who perceive it as a tax on the dead, it doesn’t actually raise much taxation revenue for the Government. And as is so often the case, the taxation burden is much easier to avoid for those with the financial resources to take advantage the various tax reliefs available, pushing that burden on to those less able to shoulder the financial weight”.
Redfern noted that due to changes to the way people live as well as rises in house prices, which have increased the number of estates likely to fall under the scope of Inheritance Tax, it was time to take a look at the taxation system as a whole. He stated that “with inheritances currently worth £100 billion per year and set to double in the next two decades, this is an area ripe for revisiting, with the intention to make the system fairer for all those affected by it, whilst also aiding the Government to make efficiencies in the tax revenue potential”. He concluded that Inheritance Tax was just one area of many, including National Insurance, which would benefit from an overhaul.
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