There may be tax cuts in today’s Autumn Statement if government-fuelled rumours are to be believed - but there’s been a dramatic rise in tax receipts announced by the Treasury just hours before Jeremy Hunt’s speech.
Inheritance tax receipts have been on the rise and stand at £4.6 billion for the period from April to October this year. This is £0.5 billion higher than the same period last year.
IHT is a 40 per cent tax on the estate of those who have passed away, however it is only applied to the amount above the threshold of £500,000 if passed to the children or grandchildren of the deceased, while no tax is owed if the estate is passed to a spouse, civil partner, charity or community organisation. If the estate is passed to someone that doesn’t fall within any of these categories, tax is charged on anything above the threshold of £325,000.
Helen Morrissey, an analyst at business consultancy Hargreaves Lansdown, says: “Early rumours suggested the government was keen to cut inheritance tax [in the Autumn Statement]. This is a widely hated tax, despite the fact only about four per cent of estates pay it.
“It has been reported the Chancellor is looking to slash the tax rate from its current 40 down to 30 per cent or even 20 per cent. It’s true that IHT receipts have been creeping up – last year was a record breaker with receipts standing in excess of £7 billion. This current year is well on track to surpass it as we are already £0.5 billion ahead of where we were last year.
“However, reports suggest government is cooling on the idea, given the optics of favouring the better off over those at the sharp end of the cost-of-living crisis. Looking more widely, it is a tax that is in need of wider reform.
“Nil rate bands and gifting thresholds have remained untouched for years and this means many people who may not have ever thought they would have an IHT liability are being caught in the net due to high house price growth, for instance. Increasing nil rate bands in particular could play a major part in lifting many of these people out of the net, while also reducing the liability of wealthier households.”
Other tax reductions rumoured to be under consideration include a reduction in income tax or national insurance, although there are concerns these could prove inflationary.
Morrissey adds: “It’s fair to say the tax take has soared, with receipts currently standing at a whopping £11.2 billion more than in the same period last year. Again, this is down to tax thresholds that haven’t been increased in years, dragging more and more people into paying higher tax. Any reduction would prove incredibly popular and would be in line with the Prime Minister’s previous pledge to reduce income tax.”
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Abolishing Section 24 is top of my wishlist. This would be beneficial for millions of tenants and around half of all landlords.
Next would be restoring taper or indexation relief on CGT. The current system is pure theft. Other countries have zero CGT after so many years of ownership so the UK is very much out of step.
On a more general level I would love to see the end of the extra penalties at the cliff edges. Taking someone's Child Benefit at the same time they enter the higher rate tax band is especially harsh and counterproductive. How many people work less than they otherwise would purely to stay a basic rate tax payer and keep the Child Benefit entitlement? Certainly 2 of my sons and one daughter-in-law have slammed the brakes on to keep below the threshold. Two of them are construction workers and lorry drivers, not degree educated high flyers. Just standard issue working blokes.
It's nice for their children to have them home a bit more but how much more tax revenue would HMRC rake in if all those parents worked to capacity? Who do they think is paying tax and funding CB in the first place?
It's a similar situation at £100K. Isn't 40% plus NI more than enough to take off someone? Haven't they worked out 40% of every £1000 is £400? 60% of nothing is zero.
Jo. While I agree with most of to comments my top two are missing.
(1) Section 21 the very foundation of all Private Letting’s and certainly there was no Statutory Periodic Tenancies either that you now use like almost everyone else, that didn’t happen until years later and not stand alone but a bolt on or amendment to S.21 a bit like all the other messing about they have done with it causing the Crisis & Homelessness deliberately that now exists.
(2) Capital Gains Tax or more accurately fake c/gains tax. The biggest blocker of investment I could have provided several times more homes only for that. They keep telling us only a small percentage of people who pay c/gains tax, so they are unfairly hammering those who do pay it or Revenue wouldn’t be raking in £17b pa.
You pay tax on everything all your life then tax you again on Death but worse than that it’s not tax on profit but tax on inflation.
Apart from that I go along with what you are saying. Although I reserve judgment on the good Tenants that are always paid up and no ASB should be installed for ever in a Property many on Benefits living off the Tax payer never any financial contribution or a penny out of their pocket I wouldn’t reward leaches.
Child Benefits is a bad joke the people that fund it in the main are excluded from any benefit from it, that’s virtually every working couple with a combined salary of over £50k pa don’t they have to rear their kids as well but required to pay for other peoples kids.
I can see many of the New Developments going up now are not suitable for Families and a throw back to the 1960’s it won’t take 80 years to start pulling down those over priced portable cabins in the Sky.
The only guarantee is that in the end the government will ‘ make’ 💰💰😲😲. It would be political and election suicide to help landlords. Our decision whether to stay or go has to be based on the world we have today, and the worsening prospect of where we WILL be under Labour 🔴
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