Will he/won’t he abolish Inheritance Tax? The Pre-Budget rumour is still out there, perhaps ‘running it up the flagpole to see if it catches the wind’, or perhaps to distract from other rabbits which may be pulled from Jeremy H’s figurative hat. And yet, IHT is bringing in record amounts, on track for £5.7bn in the current tax year. But contrast that with CGT, £17.8bn and income tax £1025bn, of which the top 1% of earners pay around £21bn, and you can see why ending IHT would sound good and not actually make a big dent in the finances. Particularly as it would more than likely be replaced by a ‘gift tax’ of some kind, which will sound nicer but end up raising more. Remember, too, that previous governments proudly abolished the predecessors of IHT. Estate Duty became Capital Transfer Tax and, yes, that became Inheritance Tax. And not a lot changed.
Well, the lesson of this week in politics must be to expect the unexpected. Or, alternative interpretation, to expect more of the same. The speculation on the future of Inheritance Tax has switched from abolition to a rise in the amount of wealth you can have before the 40% payment hits.