The impending changes to inheritance tax have sparked a new debate, with the Labour party claiming that Rishi Sunak stands to save himself £300 million if he pushes through his proposed alterations. It's worth noting that tax laws are not set in stone, and it's unlikely that his policy proposals will remain unchanged until anyone he knows faces mortality. The crux of this argument is simple: only 4% of the population pays inheritance tax, and Sunak is undeniably wealthy. Therefore, it's easy to believe that he doesn't have the average citizen's interests at heart.
The way we discuss inheritance tax encapsulates everything that is wrong with British political discourse. It was effectively phased out in the 2015 Finance Act with the introduction of the "resident's nil-rate band" for cases where a married couple passes their primary residence to their direct descendants. Since 2020, the first million pounds distributed in this manner has been exempt. In essence, this constitutes the inheritance, while the rest typically consists of items with low resale value, such as silverware, and a few sentimental tokens.
We repeatedly debate ending this tax, seemingly forgetting that, with the exemptions for the super-rich and the million-pound threshold, it is already effectively defanged. It's akin to watching a dog repeatedly fooled by a trickster who pretends to throw a ball but has concealed it up his sleeve. However, the former is amusing, whereas the latter is tiresome.
This inevitably leads to discussions about why people, who won't be affected by the tax, passionately advocate for its abolition, even though it draws revenue from a segment they will never belong to, all for the betterment of the society they live in.
Dr Eric Boahen, Senior Lecturer and Cluster Lead in Accounting, Finance and Economics, Royal Docks School of Business and Law, UEL told the newsweekly, “Inheritance tax is a levy placed on the property, money and possessions of a person who has passed away, the level of inheritance tax depends on the: value of the estate (above £325,000), beneficiary of the estate and time between the donor's death and date of gift. Inheritance tax is a tax on money going, usually, from parents to children. This means that children of wealthy parents get windfalls that give them access to opportunities children of less wealthy parents could only dream of.
“The Conservative Party’s position on inheritance tax is to abolish/slash the inheritance tax. On the contrary, the Labour Party is planning to increase the inheritance tax in a further raid on the middle class and businesses to raise as much as £4bn annually. The Institute of Fiscal Studies (IFS) indicates that scrapping or abolition of the inheritance tax would cost the UK government almost £15bn a year in lost revenue by 2032. Both the Conservative and Labour Parties proposed changes to inheritance tax have sparked concerns within families, businesses, farming landowning and investing communities. Consequently, several property-owning and wealthy South Asian families are facing inheritance tax challenges.”
