By Gregory Taylor
In just about everything we do we are taxed, from buying petrol to going on holiday, buying alcohol and on what we earn. It’s something that most people in this country can never get away from, but not only that, even when we die your family could have to pay inheritance tax on your property and estate.
When the Liberal government of Herbert Asquith brought in the people’s budget in 1909 it brought in a super tax on people who had an income of more than £5,000, not only this but there was also an increase in inheritance tax. This tax was brought in to pay for the welfare state. Of course, Inheritance Tax (or Death Duty, as it was known) was not something new there had been a Death Duty tax which had come in during the end of the 19th century, but by 1914 a fixed rate was brought about, which was set out at the sum of £100 pounds meaning that any estate worth more than this would have to pay death duties. The main impact of this new tax was mostly on the upper classes who, for the first time, were forced to sell parts of there estates to pay for the new tax
So, fast forward to today and what do have now? Well, the threshold now for inheritance tax is £325,000 which means that if your property is worth more than this you will have to pay the state some of the estate you have been left. So if you are left a house that is worth £500,000 pounds you have to pay £70,000 to the state. So not matter how much tax you have paid during your lifetime your family is still made to pay inheritance tax.
The biggest impact of the inheritance tax is in London, the South East and East Anglia, with £633 million being paid in London and £662 million being paid in the South East. HMRC revenues from inheritance tax saw an increase from £2.9 billion in 2011-2012 to £3.1 billion for 2012 -2013 and this likely to increase. So this is likely to affect people buying a house or flat in central London with the average price of property being over £325,000.
Of course, when you look at the figures its only small proportion of people who have to pay. A very good case can be made about why it should not be put up to a million pounds. Some arguments make the case on the moral grounds and that it’s a good way to give back to society, others will say that their children should make it on their own without family help and it is very common for parents to spend their money and not give it to their children. Bill Gates, for example, plans on giving away his money to charity and it’s very common these days to see the very rich take this line.
The increase of house prices means that more and more people are being forced into paying inheritance tax. The case for putting up the Inheritance tax has never been stronger, of course some will say that this only benefits the middle classes but I don’t see it from that point of view, but more from the point of hard-working families who might like to leave some of their inheritance to their children. It’s right that the very wealthy pay inheritance tax, but putting up inheritance tax to say, £700,000 or even a million pounds should be seen as way of helping hard-working people. This is not about helping the rich or wealthy but about making the tax fairer for people.
Some will say rightly so that the Tories are only pushing this policy because of the election next May and some will see it as a ways to win over the swing voters and the middle classes, but putting politics aside, whoever wins the next election should make a start to reform this tax to make it fairer on the working people .