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£3.8 Billion Inheritance Tax Collected in 2014
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Accredited members must work to the EPN Professional Charter, meet our stringent entry requirements and abide by our ongoing requirements. Members of the public can use an EPN member with confidence. The taxman raked in £3.8billion in inheritance tax last year – an increase of £400million on 2013. The steep rise - 11 per cent year on year - shows tens of thousands of middle-income families are being dragged into paying a levy once intended for the wealthy. It will strengthen calls for the next Government to raise the threshold for inheritance tax, which has remained unchanged since 2009.
George Osborne has already hinted that the Tories would increase the threshold if they won the next election, saying inheritance tax should only be paid ‘by the rich’.
The tax is charged at 40 per cent of the value of any estate above £325,000, or £650,000 for couples. Rapidly rising property prices means growing numbers of middle-income families have been pulled into the inheritance tax net in recent years. According to the Office for National Statistics, the average UK home is now worth £271,000. In London it is £501,000.
Andy Silvester, of the TaxPayers’ Alliance, said: ‘These figures are just further proof that Inheritance tax – originally designed only for the very richest – is clobbering more and more ordinary families.
‘By refusing to move the thresholds in line with property prices, successive Chancellors have sneakily used this Death Tax as an increasingly lucrative way of topping up the Treasury coffers. Inheritance Tax is immoral and unfair, and it is time for it to go.’
Howard Cox, founder of the Fair Home Tax Campaign, said the Treasury was using the tax as a ‘reliable income stream’. He said: ‘Inheritance tax used to be a levy on the rich, but with property values growing far faster than inflation, this insensitive tax now impacts on all who own an average-value house.’
A recent survey by the group found 80 per cent of its supporters believed inheritance tax needed urgent reform. Earlier this month, Mr Osborne suggested the Tory manifesto would include proposed changes to the much-derided tax. The Chancellor said: ‘David Cameron has made it clear, as have I, that we believe inheritance tax is a tax that should be paid by the rich and we will set out our further approach closer to the election.’
In 2010, the Prime Minister Mr Cameron promised to raise the inheritance tax threshold to £1million, but it was quashed by the Liberal Democrats after the Coalition was formed.
Instead he announced a paltry rise to £329,000, which will be introduced from April. The latest HMRC figures, released yesterday, also show homeowners are being hit with enormous stamp duty bills. Britons paid £2.3billion more in stamp duty in 2014 than the previous year, with the taxman collecting £10.9billion on the purchase of resid
The rise reflects soaring property prices, which increased by double digits in many parts of the country last year. In December, the Government unveiled radical reforms to stamp duty, redefining the bands and saving taxpayers £4,500 on an average-priced home.
But while many families are being hit by stamp duty and inheritance tax, families will soon be able to hand their pension pots down tax-free. The Chancellor announced last year that the 55 per cent ‘death tax’ on pension pots bequeathed directly to children will be scrapped.
It means that if a pension-holder dies before age 75, there will be no tax. If they are over 75, beneficiaries will only pay income tax as they withdraw cash. If any of the pot remains when the beneficiary dies, they can pass it on again with the same tax perks, allowing pensions to pass down through generations.