Inheritance tax reliefs save UK’s richest £666m a year
4 Jun 2019
Some of the wealthiest families in the UK are benefiting from up to £666m a year in inheritance tax (IHT) reliefs on agricultural land and business property, according to HMRC data obtained by Tax Justice UK
4 Jun 2019
The campaigning group is calling for a cap on the amount of relief available to estates of over £1m in a bid to curb use of the reliefs.
The freedom of information request found that 261 families with agricultural property worth more than £1m shared £208m in tax relief in 2015/16, the latest year for which figures are available, representing 62% of the agricultural property relief given out that year.
In the same period, 234 families with business assets worth over £1m shared £458m business property relief, representing 77% of the relief given out that year.
Overall, the group says 71% of these two categories of IHT tax reliefs went to families with farm and business property worth over £1m.
The analysis shows some 62 families with agricultural property worth more than £2.5m shared an approximate tax saving of £107m, which works out as an average saving of £1.7m per estate.
At the very top, 51 families with business property assets worth over £5m shared an approximate tax saving of £327m, which works out as an average saving of £6.4m per estate.
The report also points out that there is evidence to suggest these reliefs are open to abuse. In 2017 just 40% of agricultural land was purchased by farmers, down from over 60% in 2011, while investors have flocked to buy agricultural land and property, it states.
Robert Palmer, the executive director of Tax Justice UK, said: ‘Wealth inequality is at staggeringly high levels and this report shows how it is in part underpinned by inheritance tax relief. There is no justification for politicians allowing costly tax breaks to continue to operate in this way.’
The report’s recommendations include a review of the fairness and effectiveness of IHT reliefs with consideration given to whether they should continue at all; a cap on the amount of relief available to estates that have a value over £1m; an end to tax relief on shares invested in companies in which a family has no substantial or controlling interest; and an end to what it dubs the ‘double whammy’ of income and IHT giveaways on Alternative Investment Market listed ISA share products.
By Pat Sweet