Article

UK: Calls for tax breaks to be capped for wealthy.


Added on 03/06/2019

As published on ftadviser.com, Monday 3rd June, 2019.

 

Inheritance tax reliefs in the UK are favouring the wealthy with up to £666m in breaks going to already "well off" families each year, a new report has claimed.

Research published by campaign group Tax Justice UK yesterday (June 2) found in 2015/16 more than 71 per cent of the tax break went to families with farm and business property worth in excess of £1m.

Agricultural property relief reduces inheritance tax at a rate of up to 100 per cent and business property relief reduces tax by between 50 and 100 per cent, in a bid to make it easier to keep farms and businesses in the family after a death.

The group stated the current regime was giving an "unfair government subsidy to the already wealthy" and "generous" tax breaks which it claimed could be spent instead on doctors and teachers.

Via a Freedom of Information request submitted to HM Revenue & Customs, Tax Justice UK found 261 families with agricultural property worth more than £1m shared £208m in tax relief in 2015/16, whilst 234 families with business assets worth over £1m shared £458m.

The research found 51 wealthy families "at the very top" shared approximately £6.4m each in tax breaks, a total of £326.4m.

The tax breaks are in addition to the inheritance tax threshold of up to £950,000 per couple.

The campaign group called for the government to, "at the very least", cap the amount of relief that can be granted and suggested any reform should form part of a wider analysis of subsidies and tax breaks for landowners.

The report also called for an end to tax relief on shares invested in companies in which a family "has no substantial or controlling interest".

Labour's shadow chancellor John McDonnell MP said the report "lays bare" the extent to which the current tax regime "favours wealthy families".

He said: "Labour will tackle the scourge of tax avoidance and review tax reliefs to make sure the rich pay their fair share towards the public services we all need."