IFS suggests increasing inheritance tax

Posted 13/09/2011

Inheritance tax could be increased after the recommendation was made by a leading thinktank.

According to the Institute for Fiscal Studies (IFS), raising the levy may be a viable alternative to the current 50p income tax, which chancellor George Osborne is under pressure to drop in the next budget, the Daily Telegraph reports.

The body noted the 50p rate could lead to more high-earning individuals avoiding the need to make payments by relocating to countries that have more favourable tax policies.

Paul Johnson, director of the IFS, therefore suggested inheritance tax could be increased as a more effective way of taxing the wealthy.

“Wealth inequality has grown very strongly over the past few years, so if you are worried about it, inheritance tax is relatively useful,” he was quoted by the news source as saying, adding retaining 50p tax – which applies to those earning £150,000 or more – is “too high”.

Under current inheritance tax law, 40 per cent is payable to the government if the amount is over £325,000 in total.