NEWS

Wealthiest Save £666m due to UK Inheritance Tax Relief

Campaigning group Tax Justice UK have gathered data from HMRC showing that the richest families in the UK are benefiting from a yearly inheritance tax (IHT) reliefs on agricultural land and business property of up to £666m.

As a result, the group aim to have a cap on estates of over £1m put into place, to stop use of the reliefs.

From the data gathered, they discovered that in 2015/16 there was £208m in tax relief shared between 261 families with agricultural property valued at over £1m. This was 62% of the relief given to agricultural properties that year.

There was also £458m of business property relief shared between 234 families with business assets of over £1m. This was 77% of the relief given that year.

In total, 71% of IHT tax reliefs across the two categories was given to families with farm and business properties worth over £1m.

Among the 62 families with agricultural properties worth more than £2.5m, they were able to save a combined £107m on tax – an average of £1.7m per estate.

The biggest savings came from the 51 families with business property assets of over £5m. They were able to save a combined £327m in taxes – a huge average of £6.4m saved per estate.

As a result of the huge savings, the reliefs are at risk of being abused. With only 40% of agricultural land being purchased by farmers in 2017, a reduction from 60% in 2011, it appears that investors have instead been the ones running to purchase agricultural land and properties.

Among the recommendations from the report, they suggest a review of the fairness and effectiveness of IHT reliefs, and to consider whether they should even exist. There is always a balance between the initial introduction of reliefs for tax situations which often become open to more aggressive use, or even abuse.

The principal of investing in complaint businesses and then obtaining subsequent inheritance tax relief is fair. However, if it becomes apparent that there are people abusing the laws and obtaining relief where it is not applicable, a clamp down may affect the genuine users of such relief if they are withdrawn or restricted and this always a fine balance to strike.


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