With the Chancellor of the Exchequer, Jeremy Hunt, expected to maintain the freeze on the threshold under which people do not have to pay inheritance tax in its package of budget measures, this week Handelsbanken Wealth & Asset Management released new research examining people’s attitudes to the tax.
More than half of UK adults of almost all age groups and regions want to see inheritance tax abolished or at least reduced, research from Handelsbanken Wealth & Asset Management reveals. The finding comes ahead of next Thursday's statement of budget measures from the UK government, in which taxes are expected to rise, and cuts made to public spending to shore up the public finances.
Nevertheless, there is some support for keeping IHT levels as they are, with 21 per cent preferring the status quo, while 12 per cent would support a rise in IHT, the research shows.
The study was conducted by independent research company Opinium among a nationally and politically representative sample of 2,000 UK adults aged 18-plus between 21 and 22 September 2022.
The tax is one of the most important ones that a high net worth individual is likely to contend with.
HMRC figures show that IHT receipts for the 2021/22 tax year reached a record £6.1 billion ($6.94 billion) after a 14 per cent increase on the previous tax year, which was the largest single year increase since 2015/16.
The increase is attributed partly to the knock-on effect of the Covid-19 pandemic on the volume of wealth transfers and IHT-liable deaths, the firm said.
However, rising asset prices including property plus the government decision in 2008/09 to maintain the IHT nil rate band threshold at £325,000 up to and including the 2025/26 tax year, has also increased IHT receipts, the firm continued. Prior to that, the threshold was usually increased annually.
In addition, people leaving their property to direct descendants are entitled to an extra £175,000 residential nil rate band enabling the estate to pass on £500,000. If the allowance is unused, a surviving spouse or civil partner can pass on £1 million exempt from IHT at 40 per cent.
Handelsbanken Wealth & Asset Management’s research shows that
more than a quarter of adults want to see IHT scrapped. Women are
also more likely to want it scrapped than men while 50 to
64-year-olds are the most in favour of scrapping the tax,
compared with 29 per cent of over-65s and 21 per cent of 18 to
A quarter want to see IHT reduced, with over-65s at 30 per cent most in favour compared with just 22 per cent of 35 to 49-year-olds. Conservative and Liberal Democrat voters are both 57 per cent in favour of scrapping or cutting IHT, compared with 45 per cent of Labour voters.
Around the country, people in Wales are most in favour of scrapping IHT, narrowly ahead of the South at 31 per cent. Londoners are most in favour of increasing IHT compared with other regions, although it is still only 16 per cent in favour, the survey shows.
Christine Ross, head of private office and client director at Handelsbanken Wealth & Asset Management said: “It is safe to rule out the scrapping of IHT and probably any reductions in the short-term given the current debate about tax cuts. It is, however, clear that cutting or dropping IHT would be popular.”
“That said, it has seemed that some changes to IHT reliefs have been on the cards for a while, and we may still see the replacement of annual gift exemptions which can allow those gifting surplus incomes to potentially give away significant amounts outside the taxable estate,” she continued.
Mark Collins, head of tax at Handelsbanken Wealth & Asset
Management added: “The fact that IHT receipts are at an all-time
high both in nominal terms and as a percentage of GDP underlines
how important the tax is to the total government tax take.”
“Government forecasts indicate IHT receipts are set to rise to more than £6.7 billion in the current tax year, which again underlines the importance of seeking advice and regularly reviewing your affairs to reduce your exposure to inheritance tax,” he said.