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Scrapping inheritance tax would cost £15bn a year by 2032, says IFS (www.theguardian.com)

submitted 1 year ago by Mex@feddit.uk to c/unitedkingdom@feddit.uk

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[–] tal@kbin.social 10 points 1 year ago* (last edited 1 year ago)

The IFS report, Reforming Inheritance Tax, found that in 2024, the wealthiest fifth of donors will bequeath an average of £380,000 per child, and pay inheritance tax of about 10% of this amount.

Wait, inheritance tax in the UK is only 10%? Damn, it's 40% here in the US.

googles

Ah, no. The Guardian is just factoring in the exempt portion.

https://www.which.co.uk/money/tax/inheritance-tax/inheritance-tax-thresholds-rates-and-who-pays-ajcJC0S14edm

Everyone in the 2023-24 tax year has a tax-free inheritance tax allowance of £325,000 - known as the nil-rate band. The allowance has remained the same since 2010-11.

The standard inheritance tax rate is 40% of anything in your estate over the £325,000 threshold.

Okay, so it works like the US, except that in the US, the exempt portion is much higher, like $13 million. Double that for married couples.

Is the primary residence exempt or something? Because otherwise, I'd think that that'd require a lot of residences to be sold to cover taxes, as a lot of houses are going to be more than that.

looks more

Ah. No, but you do get an extra allowance for that.

Since April 2017, you've been able to pay less inheritance tax when leaving property to a family member. For the 2023-24 tax year, this transferable allowance is £175,000.

Also, it's interesting that the exemption isn't indexed for inflation in the UK, as in the US, it is. The UK has the very-favorable-to-the-elderly triple pension lock that does (at minimum) track inflation, but it sure doesn't extend to inheritance tax.