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The Mail reported earlier this year that Mr Sunak and the Treasury will rake in £90billion over the next five years through various wealth taxes. Figures from the Office for Budget Responsibility showed that the Treasury earned £14.9billion from capital gains and inheritance tax in 2019-20, but experts suspect this figure is set to rise by 40 percent post-pandemic.
The current standard inheritance tax rate is 40 percent if you are passing property down to non-direct descents, and is only charged on the part of your property that is worth more than £325,000.
If your direct descendants (your children) are inheriting your estate, the taxation rate more than halves.
For example, if you inherited an estate worth £650,000 from a distant relative or friend, you would be taxed on the second half of its worth (325,000), at a price of £130,000 in tax. However, if you inherit a £650,000 property from your parents you will be taxed at a much lower rate of £60,000.
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However, if you inherit a £650,000 property from your parents you will be taxed at a much lower rate of £60,000.
But Mr Sunak could be looking into increasing this rate as he aims to raise more funds following the economic recession that came with the pandemic.
At the moment, the vast majority of estates do not pay inheritance tax as they are not worth more than £350,000.
Over the next five years, more than 94 percent of estates are forecast to have zero inheritance tax liability.
If a change needs to be made, do you think it would be best for Mr Sunak to increase the percentage of inheritance tax for those properties worth more than £325,000 which are already liable? Or, is it best to impose a small inheritance tax rate on properties under the £325,000 threshold?
Sam Collins, policy adviser at the Institute of Economic Affairs think tank, said: “Inheritance tax is known as Britain’s most hated tax for a reason.
“It is not only immoral as a form of double taxation but is a bureaucratic nightmare for families.
“Instead of increasing the tax burden on businesses and individuals, the Chancellor should go for growth and take radical steps to simplify our tax code – leaving more money in the hands of individuals, families and businesses.
“The Chancellor argues that investment is key to our economic recovery, but capital gains tax has the reverse effect.
“At high levels, it discourages investment, deters entrepreneurship and encourages tax avoidance.”
Do you agree with Mr Collins? Would an increase in inheritance tax dissuade entrepreneurs and financiers from investing in the UK? Share your thoughts in the comments section.
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A Budget document from March outlined that Mr Sunak was using stealth taxes in order to increase the amount the Government received from duties.
A stealth tax is a tax levied in such a way that is largely unnoticed, or not recognized as a tax.
They can take the form of business income taxes, sales taxes, property taxes, fees, surcharges, business licensing and permitting costs.
Chief Economist at Resolution Foundation, Jack Leslie, told Express.co.uk earlier this year that the Government should reform wealth taxes in order to raise funds rather than introducing a brand-new inheritance taxation scheme.
He said: “The Government should fix the system that it has, make it fairer, and close the loopholes.
“You could raise billions without touching the headline rates, fixing the current system is a better approach than trying to introduce a whole new wealth tax.
“One of the really big trends in the economy over the last 30 years is that the overall value of the wealth people hold is worth around twice what it was 30 years ago.”
Should the richest be taxed more to decrease austerity in the UK, rather than normal people bearing the brunt of an increase in inheritance tax? Vote now.
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