Call for cuts after Treasury's inheritance tax haul hits record £3.9bn
Call for cuts after Treasury’s inheritance tax haul hits record £3.9bn
- Comes as data showed boost in tax revenues resulted in lower borrowing
Inheritance taxes are on course to hit a record high after the Treasury took £3.9billion from the death duty in the first half of the financial year alone.
The bumper haul, £400million higher than in the same period last year, is likely to intensify calls backed by several Tory MPs for Jeremy Hunt to scrap the tax.
The controversial levy, which sees beneficiaries pay for a second time for money already taxed throughout the benefactor’s life, has long been resented on the Right of the party.
It came as data showed a boost in tax revenues had resulted in lower than expected borrowing for the first half of the year.
This may give the Chancellor room to cut taxes next spring – but he has been dismissive of taking such action this autumn.
Lower than expected borrowing may give the Chancellor room to cut taxes next spring – but he has been dismissive of taking such action this autumn. Pictured, Chancellor Jeremy Hunt
Figures show Treasury coffers are being boosted by record corporation tax, up £7.6billion to £44.9billion, income tax, up £12.8billion to £120.8billion, and VAT, up £6.8billion to £85.3billion over the six months to the end of September.
That is partly due to a stealth raid on income tax, with the thresholds for paying it frozen instead of rising in line with inflation.
And corporation tax revenues have risen after the rate went up from 19 to 25 per cent in the spring, seeing Britain slide down the global competitiveness rankings.
Inheritance tax has also been subject to a stealth raid by the Treasury, with the threshold for paying it frozen even as house prices have risen.
Death duties generated a record £7.1billion for the Government in the 2023/24 financial year, and analysts think the annual total will climb even higher.
Investment broker Wealth Club estimates the average bill could hit £233,000 in 2023/24, with more than 30,000 families affected – up from £214,000 three years ago, with a 12 per cent increase in those taxed.
Julia Peake from asset manager Canada Life said this means inheritance was paying £156million to the Treasury every week.
Inheritance tax has also been subject to a stealth raid by the Treasury, with the threshold for paying it frozen even as house prices have risen
But last week, Mr Hunt warned an increase of up to £30billion on the cost of borrowing was being pencilled into public debt, meaning ‘difficult decisions’ would have to be taken at next month’s autumn statement.
Ashley Webb, from Capital Economics, said: ‘Although the Chancellor has ruled out tax cuts in the autumn statement, we still expect he will have some wiggle room for tax cuts and/or spending rises in the March Budget.’
Elizabeth Martins, from HSBC, said: ‘A little more fiscal room might allow [tax cuts], even if it raises some eyebrows.’
No 10 is considering a tax cut for 5.6million higher earners by raising the threshold for the 40p rate of income tax from £50,271, The Daily Telegraph reported last night.
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