The commission proposed scrapping the tax altogether, and replacing it with a
capital gains charge on death, with the family home, as per CGT, exempt.
That, in my view, is something we should all applaud. There has been a tide
of criticism following the rising prices of homes in middle England, without a
corresponding rise in the threshold.
It’s not only middle class families are looking at hefty IHT bills. Some
working class people, particularly those who bought their own homes cheaply as
part of the right-to-buy scheme, will also be hit.
IHT was not designed to tax those constituencies. It was introduced to hit
The people who were initially targeted are able to avoid it, as everyone
knows. It’s difficult to say whether or not the CGT method will make it easier
or harder for them to avoid.
These are people, of course, who can afford expensive tax advice.
What would have been a useful ,though unlikely (for the Tories), suggestion
would have been other ways for this constituency to be taxed.
Some reform of domicile rules, often mooted, but never executed, might be a
The critical point, really, and it is borne out by IHT better than almost any
other tax, is that the burden of taxation seems to fall on people at the bottom
rather than those further up the income scale.
In that light, the CIoT’s initiative to broaden the base of tax advice can
only help. If people saw the merit in planning for things like IHT across the
board, the fact that the burden seems to fall so heavily on the middle classes
and others would be less marked.
Kevin Reed is Accountancy Age’s personal tax correspondent
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