It is Britain’s most hated tax, yet hardly anyone pays it. Until recently, this paradox appeared to make raising more money from inheritance tax a no-go zone. Yet leading thinktanks are now talking about it as a way to deal with some of the most burning questions on the minds of middle-class families.
Baby boomers have unprecedented stashes of wealth tied up in their properties, yet their children and grandchildren are paying sky-high rents from squeezed incomes, and struggle to raise a deposit for a flat.
Families also face a social care lottery that could wipe out an inheritance if a parent or grandparent cannot look after themselves.
This month the Organisation for Economic Cooperation and Development proposed inheritance tax as a way to reduce wealth inequality and redistribute between the generations.
Adam Corlett, the report’s author, says: “We are going to need extra revenue in the coming years both to help the younger generation who have been screwed over in the jobs market and the housing market, and to help with their education – and also to provide the healthcare and social care people expect in their old age. We have been promoting the role wealth taxes can play, and inheritance tax should be a part of that mix.”
But inheritance tax faces entrenched hostility. An opinion poll in 2015 showed 59% opposed it, making it the UK’s least popular tax. Research by the Fabian Society that year found people from across the political spectrum disliked the levy because it was imposed at a time of grief on money on which the deceased had already paid tax.
If inheritance tax is part of the remedy for gaping inequalities and a looming tax crisis, what is needed for Britain to come round to the idea?
Read more at: https://www.theguardian.com/money/2018/apr/28/inheritance-tax-raise-inequality-wealth