1 In 10 Adults Born In 1980s Set To Inherit More Than Average Lifetime Earnings
Up to 10% of UK adults born in the 1980s will inherit more than half as much as an average person would earn in their lifetime.
A report by the Institute for Fiscal Studies (IFS) has found that as many as one in ten UK adults will inherit more than half than the average person would earn during a lifetime, from their parents. IFS has said that the wealth gained from inheritance is fast becoming the “most important determinant of how well-off people will become.”
The report found that for those born in the 80s will be worth as much as 14% of their overall lifetime earnings, a median inheritance of £136,000. This is a large difference compared to the 8% for people born in the 60s, with a median inheritance of £66.000. This could be welcome news at a time when young adults have had little to no pay rises compared to previous generations.
With the pandemic likely to cause economic fallout after the Government spent billions to keep firms and workers afloat, as well as boost the housing market with a stamp duty holiday, there have been growing calls to launch a wealth tax.
A wealth tax would see the “very best off people” taxed more heavily. Official figures show that the income of the richest 20% of people in Britain was more than six times the poorest 20% in the last financial year.
With adults born in the 80s earning less than those born 10 years earlier, at the same age, the IFS found that whilst one in 10 of those born in the 1960s would inherit an amount equal to at least 32% of average lifetime earnings, one in 10 of those born in the 1980s will inherit more than 52% of average lifetime earnings.
David Sturrock, a senior research economist at the IFS, said:
“So what we see today as differences in wealth between different generations is on course to have important implications for social (im)mobility within younger generations.”
It has been known that super-rich families are able to use loopholes so that they may pay a lower rate of tax on their estates, and campaigners have pushed for these to be closed. With the government desperate to make up the deficit the corona virus has caused, it may look to tax those with higher wealth to make up the shortfall.
Robert Palmer, executive director of the campaign group Tax Justice UK, said:
“This report is further proof of the scale of wealth inequality with inheritances set to grow in coming years.”
“It is natural parents want to hand a legacy to their kids, but at some point we need a grown-up conversation about wealth. As we build back from the economic shock of coronavirus, politicians should use the tax system to tackle inequality and support high quality public services.”