Scrapping inheritance tax sounds like a costly mistake, but it’s a noble idea (Scrapping inheritance tax would cost £15bn a year by 2032, says IFS, 27 September). If all personal income, including legacies and gifts, were taxed like wages, someone on an average income would pay the marginal rate, 20%, on a small legacy, but a company director on a salary of £150,000 would pay the top rate, 45%. Abolishing the £325,000 tax-free allowance and levying income tax on legacies instead would make up for the revenue lost from scrapping inheritance tax several times over.
Perhaps we could consider equalising the tax taken from wages, pensions, dividends, capital gains and legacies. I can’t find a fag packet to do the calculation, but I reckon this might provide the missing £350m a week promised for the NHS.
Richard Cooper
Chichester, West Sussex
Ideally, inheritance tax should be scrapped. It raises little in proportion to other taxes and there is no moral justification to tax an individual on their death. The argument that inheritance tax is only paid by 3.7% of the population is neither here nor there. The fact remains that it is a pernicious money-grab by the state. Why should the state benefit from the assets of a dead person?
The US has a far more favourable exempt amount – currently $12m (£9.9m), although this is being reduced to $3.5m in 2024. US estate tax is paid only by the very wealthy.
The UK’s nil rate band of £325,000 should be increased to £1m. House prices are such that the rate, even when supplemented by the main residence, is insufficient to absorb the tax cost, leaving many families forced into selling the home in order to pay the tax.
Miles Dean
Head of international tax, Andersen
An argument often used against inheritance tax is that it is wrong to tax people on income that has already been taxed (The inheritance tax debate we should really be having? Whether to set it at 100%, 25 September). However, most of the estate left by many is made up of money that has never been taxed, as a consequence of house-price inflation or investment in a personal pension pot.
It would be logical to think that the 4% who are liable for inheritance tax are the 4% most wealthy people in the country, but our bonkers system means that this is not the case. My parents (a retired NHS secretary and a police constable – a far cry from the mega-rich) ended up with inheritance tax on their estate, partly because complex rules changed after they made their wills.
Mike Holland
Reading, Berkshire
Research globally points to less equal societies being less productive, less healthy and less happy. For as long as the children of the wealthy inherit, their advantaged upbringings and life privileges will for ever be passed down at the expense of wider society. The question is not whether to set IHT at 100% or less, but at 100% or more. The wealth advantage that the children of the wealthy have already received should be partly redistributed.
One proposal could be to allow inheritance of the deceased’s home up to the national average house price, but taxed as income beyond. All other global assets could then be taxed at 105%. That would start to bring about a meritocracy over a generation or so, but would yield dividends in education, health, social cohesion and happiness immediately.
Timothy A Millea
Huddersfield, West Yorkshire
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