Spring Budget To Close IHT Loopholes
The Chancellor is considering closing perceived inheritance tax (IHT) loopholes in the upcoming Spring Budget which could add £800 million to Treasury coffers.
Currently, inheritance tax relief is offered for owners of agricultural land when it is passed on to children after death.
Many claim the relief is crucial in ensuring the business is able to continue without the threat of substantial tax bills.
Others have long believed that the inheritance tax breaks are a way for the ultra wealthy land rich to avoid paying tax.
Agricultural relief, currently offering between 50 per cent and 100 per cent relief on agricultural properties was worth £515 million in lost tax receipts which equates to 10 per cent of all IHT receipts in 2017/18.
The Chancellor is also set to investigate business property relief which offers a child beneficiary 100 per cent IHT relief for those inheriting full or partial ownership for unlisted companies if the donor has owned the business for more than two years.
In 2017/18, this tax was worth £710 million in lost tax receipts or 13% of total IHT contributions.
Adam Corlett, a senior economist at the think-tank, said:
“The gaping loopholes in our inheritance tax system help the super-wealthy avoid paying their fair due and undermine wider public trust in the tax system.
“Scrapping or scaling back these loopholes could raise up to £800million – money that could be far better spent on helping to ‘level up’ living standards across the country.”