SOURCE - Daily Telegraph - 28/04/20
https://www.telegraph.co.uk/tax/inheritance/inheritance-tax-raised-80pc-wwii-could-happen-coronavirus/
The Treasury has already received £2.2bn less in tax receipts this year compared with 2019
Taxes could rise dramatically as the Government attempts to fund unprecedented state spending and make up revenue lost following the economic devastation wrought by coronavirus.
It could mean the biggest shake up of the system since the Second World War, tax experts have predicted.Then, as now, Britain was faced with funding huge public debt. It meant increasing duties without burdening the lower paid, who had shouldered a large share of hardship and fighting, and led to wealthier people being taxed like never before.The PAYE system was introduced in 1944, capturing the salaries of lower and middle earners, while levying duties as high as 97.5pc for those earning the very highest incomes. Inheritance tax, then known as estate duty, comprised "Legacy and Succession duties" until 1949, was raised to 80pc after the war and hit 85pc in 1969
Today, the death duty stands at 40pc, but rumours of previous plans for reforms to inheritance tax, which never made it into the Chancellor’s emergency Covid-19 budget, could be revived to raise much needed cash, alongside manifesto pledge-breaking increases to income tax, VAT and National Insurance, experts have said.
Tax Research UK, a think tank, has called for a wealth tax to be paid for by the wealthiest to fund the recovery after Covid-19.
Its director Richard Murphy, said to have influenced former Labour leader Jeremy Corbyn, said taxes rises should be targeted at those with the greatest capacity to pay."This would be those in the top deciles of income earners and wealth owners in the UK," he said. "Tax increases impacting the income of those in other deciles would be very hard to justify if measures to increase tax on wealth and income derived from it did not also happen.
John Stevenson MP of the All Party Parliamentary Group on Inheritance Tax and Intergenerational Fairness said Rishi Sunak had a unique opportunity to "fundamentally" and "radically" overhaul the entire tax system.
The slowdown in the economy is already biting, with March tax receipts down £2.2bn compared with last year's haul. Paul Haywood-Schiefer of accountants Blick Rothenburg said the figures, released last week, provide just a glimpse of what is to come. As profits are hampered and jobs are lost, the tax take is expected to drop much further.
At the same time, the state is expected to spend more than £1 trillion for the first time ever this year, as it funds the NHS and attempts to save business and workers from financial ruin, taking public expenditure to more than half the national income.
Mike Warburton, formerly of accountants Grant Thornton and now the Telegraph's tax columnist, said the Government was unlikely to increase rates to the levels seen in the aftermath of WWII, but said some sort of increase was inevitable.
Sean McCann of insurers NFU Mutual said it was more likely current reliefs, such as being able to pass on unused pension assets tax free and the “seven-year rule”, which exempts gifts survived for seven years or more, would be scrapped to raise extra cash.He said the Government could also attack reliefs for farmers and family business owners, which provide exemption from the death duty.
A relatively new extra allowance relating to property now allows couples to pass on £1m entirely tax free. Highly complex and discriminatory against those without children, this tax break might well be in the Chancellor's crosshairs.Before coronavirus, the Government was considering reforms proposed by MPs, as well as a host of tweaks to the system suggested by the Office of Tax Simplification. However, it has declined to comment on future changes to tax policy. Rishi Sunak has said decisions on “righting the ship” will have to be made.
https://www.telegraph.co.uk/tax/inheritance/inheritance-tax-raised-80pc-wwii-could-happen-coronavirus/
The Treasury has already received £2.2bn less in tax receipts this year compared with 2019
Taxes could rise dramatically as the Government attempts to fund unprecedented state spending and make up revenue lost following the economic devastation wrought by coronavirus.
It could mean the biggest shake up of the system since the Second World War, tax experts have predicted.Then, as now, Britain was faced with funding huge public debt. It meant increasing duties without burdening the lower paid, who had shouldered a large share of hardship and fighting, and led to wealthier people being taxed like never before.The PAYE system was introduced in 1944, capturing the salaries of lower and middle earners, while levying duties as high as 97.5pc for those earning the very highest incomes. Inheritance tax, then known as estate duty, comprised "Legacy and Succession duties" until 1949, was raised to 80pc after the war and hit 85pc in 1969
Today, the death duty stands at 40pc, but rumours of previous plans for reforms to inheritance tax, which never made it into the Chancellor’s emergency Covid-19 budget, could be revived to raise much needed cash, alongside manifesto pledge-breaking increases to income tax, VAT and National Insurance, experts have said.
Tax Research UK, a think tank, has called for a wealth tax to be paid for by the wealthiest to fund the recovery after Covid-19.
Its director Richard Murphy, said to have influenced former Labour leader Jeremy Corbyn, said taxes rises should be targeted at those with the greatest capacity to pay."This would be those in the top deciles of income earners and wealth owners in the UK," he said. "Tax increases impacting the income of those in other deciles would be very hard to justify if measures to increase tax on wealth and income derived from it did not also happen.
John Stevenson MP of the All Party Parliamentary Group on Inheritance Tax and Intergenerational Fairness said Rishi Sunak had a unique opportunity to "fundamentally" and "radically" overhaul the entire tax system.
The slowdown in the economy is already biting, with March tax receipts down £2.2bn compared with last year's haul. Paul Haywood-Schiefer of accountants Blick Rothenburg said the figures, released last week, provide just a glimpse of what is to come. As profits are hampered and jobs are lost, the tax take is expected to drop much further.
At the same time, the state is expected to spend more than £1 trillion for the first time ever this year, as it funds the NHS and attempts to save business and workers from financial ruin, taking public expenditure to more than half the national income.
Mike Warburton, formerly of accountants Grant Thornton and now the Telegraph's tax columnist, said the Government was unlikely to increase rates to the levels seen in the aftermath of WWII, but said some sort of increase was inevitable.
Sean McCann of insurers NFU Mutual said it was more likely current reliefs, such as being able to pass on unused pension assets tax free and the “seven-year rule”, which exempts gifts survived for seven years or more, would be scrapped to raise extra cash.He said the Government could also attack reliefs for farmers and family business owners, which provide exemption from the death duty.
A relatively new extra allowance relating to property now allows couples to pass on £1m entirely tax free. Highly complex and discriminatory against those without children, this tax break might well be in the Chancellor's crosshairs.Before coronavirus, the Government was considering reforms proposed by MPs, as well as a host of tweaks to the system suggested by the Office of Tax Simplification. However, it has declined to comment on future changes to tax policy. Rishi Sunak has said decisions on “righting the ship” will have to be made.
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