The case for abolishing Inheritance Tax
Britain’s inheritancetax (IHT) is far more punishing than headline comparisons suggest, and should be scrapped entirely, according to a new paper published today by the Institute of Economic Affairs.
The report, A Taxing Inheritance by Rory Meakin, finds that measured on what parents can actually leave their children, the UK has the fifth highest inheritance tax in the OECD. Almost half of OECD members, 18 out of 38, levy no tax on such transfers whatsoever, and a further 10 charge preferential rates.
While Britain’s 40% headline rate sits only moderately above the OECD median, this flatters the UK‘s true position. Most countries treat transfers from parents to their own children as a special category, taxing them at lower rates or not at all. Britain makes no such distinction.