In a new report, think tank the Resolution Foundation has suggested that inheritance tax (IHT) should be abolished, and be replaced by a new ‘Lifetime Receipts Tax’.
According to the Resolution Foundation, IHT is ‘not fit to deal with wealth’ in modern Britain, and is ‘regarded as the UK’s least fair tax’.
As such, the think tank has recommended its abolition, to be replaced by a new Lifetime Receipts Tax with a ‘much lower rate’ than the current 40% standard rate of IHT.
As part of the Lifetime Receipts Tax system, each individual would have a lifetime allowance of £125,000, after which tax would be payable at a rate of 20%, up to £500,000. Beyond this, tax would be payable at a rate of 30%, the Resolution Foundation stated.
‘Inheritances are already worth over £100 billion a year, and their doubling over the next 20 years means they are going to play an even larger role in shaping British society,’ said Adam Corlett, Senior Economic Analyst at the Resolution Foundation.
‘But the current system of IHT is not fit to deal with this societal shift.
‘Rather than tweak our failed IHT system, it should be scrapped altogether and replaced with a new Lifetime Receipts Tax. This new system would be fairer to families, harder to avoid and would ensure our tax system keeps up with 21st century Britain.’