Inheritance tax – Might the government reconsider?
The debate around the cost of long-term care, and the uproar over increasing national insurance contributions, has led to the issue of wealth taxes to return to the political agenda.
One of the most well-known of these is inheritance tax. In recent years the Conservatives have been strongly against increasing the tax, but could they change their mind?
There are two key reasons why the government may consider making changes to inheritance tax: The economic reason, and the political one.
The government cannot keep borrowing, but it still needs to raise funds to tackle the many issues facing the country. It’s why the prime minister broke a manifesto pledge to deal with the covid backlog and to try and fix social care.
There is also a political risk that Labour could gain an advantage over the Conservatives on wealth taxation if it resonated with the public. There is considerable dissatisfaction at the recent increase in national insurance contributions, for adversely affecting people with lower wages.
The public accounts committee said in a report released in July that the taxpayer would be exposed to “significant financial risks for decades to come”, so a wealth tax rise in some capacity is a distinct possibility.
Would making changes to inheritance tax be the right move?