Any government’s enthusiasm for controlling inflation must be tempered by its benefits to the Treasury. Wages up, tax allowances frozen, more income tax collected. Landlords unable to afford buy-to-let mortgages selling properties, CGT allowances down, more capital gains tax collected. Despite the main residence allowance, which came into full effect just a couple of years ago, the amount of inheritance tax paid has been steadily rising, as have house prices until very recently. And now, another unexpected/probably expected boon for HMRC, who are ‘forced’ to charge interest (at 7%) on late payments of IHT (which has to be settled 6 months after death). And with probate taking several months and houses not so easy to sell, late payments are becoming the commonplace norm. Almost enough to make you believe in conspiracy theories.
Yes, Inheritance Tax is in need of reform, but then so is most of our ridiculously complex tax system. We tend to assume that ‘Death Duties’ are a relatively new, socialist tax intended to stop the landed gentry passing on their stately homes and estates and perpetuating their advantages.