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Brokers - do you think IHT should be ditched?

Journalist: John Fitzsimons, Freelance

ended 26. September 2023

Morning brokers

There has been speculation this week that the Government may be considering ditching Inheritance Tax entirely (https://www.mortgagesolutions.co.uk/news/2023/09/25/sunak-considers-scrapping-inheritance-tax-reports/)

We'd love to get your views:

  • Do you think IHT should be removed? If so, how would you replace it?
  • What difference would it make to the buying habits of your clients if it was scrapped?
  • Rather than being removed, should the Government change the way that property is handled when calculating the value of an estate?

Any and all thoughts on the rights and wrongs of IHT are very welcome!

6 responses from the Newspage community

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Simon Bridgland
Director at Charwin Private Clients
Raise the threshold, far too many families have been caught in this net. Tax is obviously the right tool to use, but even thought it doesnt raise a pimple when compared to VAT and income tax, its still a good wedge in the coffers at a time when it is needed. Many families are having to make arrangements to settle these bills when historically they would't have been caught by it. The current levels of IHT I feel deter some people from taking risks with their money, making money or starting businesses, and employing people which in turn put far more money in the pocket of HMRC. For those who simply inherited a modest estate, good luck to them. Why should they be taxed on it from such a low level. Many people congure up an image of a fat cat on their super yacht, when they think of IHT, when infact it's not the case. Look in a mirror, thats the person who pays IHT. In 2000 it was paid over on estates over 234k, until 2028 its to be on estates over 325k, ave. house price in the UK 303k.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
The Conservatives wanting to scrap a tax that only really affects the most wealthy, surely not?! Tax has to come from somewhere and if we're not effectively enforcing business taxes on the biggest companies and we scrap IHT I just don't know where it's going to come from.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The worst thing about inheritance tax is that, in the main, it can be avoided by most people simply by planning for it whilst they are alive. However, many don't; either because they don't think IHT applies to them, or they don't know they can engage the services of a financial planner and avoid or minimise it, or they simply don't want to think about their own mortality.
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Gareth Davies
Director at South Coast Mortgage Services
Scrapping IHT would have little to no impact on the majority of the public, and I cannot see it even crossing the minds of many future homebuyers. This potential move by the Tories smacks of desperation. However, reducing the tax from an astronomical 40% to a more tolerable figure seems fairer.
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David Robinson
Co-Founder at Wildcat Law
Removal of the Robin Hood tax at a time when government department after department is crying out for funds would be worse than irresponsible.
Inheritance tax is paid by the wealthier members of society. It is also still (just) a voluntary tax as there are so many ways to mitigate or avoid it altogether. Those that advocate for its removal often focus on house prices but the average English house price in July was £309,000 (according to the ONS). This is well within the allowances available.
IHT as well as providing much-needed revenue for the Chancellor, also provides a stimulus to the economy as it dissuades people from hoarding large amounts of cash for significant periods of time. Instead most wealthier individuals look to IHT friendly investment options to mitigate their tax risk. Enterprise Investment Schemes (EIS) for example raised £2.3b for businesses in 2021 to 2022.
Whilst it may be a vote winner in some circles it belongs to Trussanomics and should be avoided!
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Many people feel IHT is unfair, placing an undue burden on families already struggling with losing a loved one. There’s no doubt many people feel they should be free to pass on their wealth without having to worry about tax implications especially since tax has already been paid by the person in their lifetime. As an important source of revenue, abolishing IHT would lead to a significant loss of income for the public purse. It’s unlikely the Government will take this decision lightly without considering the implications or an alternative to fill the void. Whether or not to abolish IHT? On the one hand, it could provide a significant financial boost to families who inherit large estates, allowing them to invest in businesses and other ventures. On the other hand, it could lead to a concentration of wealth in a small number of families. Alternatives need to be carefully thought through if we are to avoid creating further wealth inequalities.