The Real Problem With Inheritance Tax Is That The Rich Don’t Pay It
THERE’S another report out detailing what’s wrong with the current system of inheritance tax in the UK. And this report gets right to the heart of what’s actually wrong with this current system. Which is that the rich bastards don’t actually pay it while anyone who owns a house in London does. It’s not actually a tax upon the rich: it’s a tax upon the middle class:
People with estates worth many millions are able to avoid the brunt of inheritance tax through complex schemes, including moving the cash offshore or investing in agricultural land and small business shares. Those avenues are closed to “moderately well–off” people whose only assets are their home and pension, Mr Johnson said.
Oh yes, everyone thinks that if you have a lot of dosh when you pop your clogs then the State gets 40% of it5. But that’s not actually how it works. Farmland for example: no inheritance tax upon that. So multi-millionaires make sure they buy a large farm or two which the kiddies then get tax free: and, of course, sell after a year or two and make off with their bundle. Small company shares also do not pay inheritance tax. So owning a company worth a few millions pays no tax. There’s endless other ones like this. If you’re rich enough to hand over the estate 7 years before you die then there’s no tax to pay either. And those are all entirely legal. Without even mentioning the idea of buggering off abroad so that the British taxman can be told to go take a hike.
The people who do end up paying inheritance tax are those who are well off but not rich. Assets might be their pension (which disappears on their death of course) and a reasonable enough house in London that they bought 30 years ago. The taxman then takes 40% of that but those larger fortunes, the ones that can afford the lawyers and the tricks, get off it all.
If we are even going to have an inheritance tax then it really ought to be one the screws the rich not the middle. So, we definitely want to change all of this at some point.
And just to make it clear, no, I’m not going to inherit anything worth taxing so it’s not about me.