Inheritance tax ‘obsolete’
By politics.co.uk staff
Chancellor George Osborne should abandon inheritance tax altogether, a thinktank has argued.
The Institute for Public Policy Research (IPPR) suggested it should be replaced with a new capital receipts tax targeting gifts to individuals of over £150,000 in a report published today.
The shift would be more progressive because the tax rate would be banded according to its size.
IPPR proposes gifts of between £150,000 and £300,000 would be taxed at 20%. Those up to £450,000 would be taxed at 30%, while the top rate of 40% would apply to gifts of over £450,000. Those between married couples and civil partnered couples would be completely exempt.
Director Nick Pearce said inheritance tax’s historically important progressive role had been eroded by a “dwindling number of estates” and political unpopularity.
“There is no political prospect of radically increasing its scope and revenue, so it is time to give up on it,” he said.
“The proceeds of a switch from inheritance tax… could be used to fund an expansion of free nursery education, a key driver of social mobility. This would be the best way of passing on opportunity, not privilege, from one generation to the next.”
