Inheritance tax could be the first tax to rise as the Government looks to get money back into its coffers, tax and advisory firm Blick Rothenberg has said.
Robert Pullen, a partner at the firm, said the government was “already turning their attention to inheritance tax” before the pandemic, and noted that it is now likely one of the taxes that the chancellor will use to get money “back into the Exchequer”.
It is possible that the government could increase inheritance taxes across the board, or slash the allowances.
Pullen added that it was after World War 2 when inheritance tax was eventually “cranked up” to 80%. However, he said that whilst such an increase now might be unlikely, it is likely that the tax will be changed to generate more revenue.
Pullen said: “Inheritance tax brings in around £5.5bn per year and, thanks to the fiscal drag of freezing the nil rate band – the 0% threshold for inheritance tax – at £325,000 since April 2009, this has resulted in an increase to the number of estates paying inheritance tax – up 67% since 2009.”
“A consultation is currently ongoing looking at reforming the tax, and follows a report from 2019 by the Office of Tax Simplification.”
He added: “As the Government continues its unprecedented support for individuals and businesses, and reports indicate the budget deficit could soon be a whopping 15%, the highest since the end of WW2 it is looking at how borrowing will need to be repaid, inheritance tax is a prime candidate as it is outside the tax lock (for income tax, VAT and NIC).
“This is likely to be one of a number of tax increases as the UK begins to grapple with the task of repaying the huge debt pile created by the crisis.”
