Inheritance tax warning as Rishi Sunak eager to enforce hike: ‘Need to pay Covid bill’ | Personal Finance | Finance

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The UK economy is expected to grow rapidly in this quarter as Prime Minister Boris Johnson lifts COVID-19 restrictions. Gross domestic product will grow 2.5 percent this quarter, the July 12-15 poll found, a touch better than the 2.4 percent predicted last month. However, with infection numbers doubling every eight to nine days, daily cases above 100,000 could be a reality within the next few weeks as the Delta variant spreads. Meanwhile, Chancellor Rishi Sunak is contemplating ways to raise funds and reform various taxes.

Pensions, wealth taxes and national insurance are among the policy areas that could be modified in order to pay for the pandemic.

iNews reported in May that Mr Sunak is “minded” to hike inheritance tax in order to raise billions from people’s assets.

A senior Government adviser said: “The preference is to introduce the tax hikes after winning the next election off the back of a ‘Covid victory bounce’.

“If that becomes the plan then we can expect the next General Election by the spring of 2023 at the latest, as we’ve got to start paying the bill for the pandemic in the ‘medium term’ as the Chancellor has already given the nation fair warning on.”

Meanwhile, a Treasury report suggested a rise in inheritance tax would be a “politically sound move, as it would not disproportionately hit lower income families, and could be presented as a wealth tax”.

The source added: “It is something the Chancellor is minded to do and is moving towards, but the timing remains uncertain.”

Pension expert at Aegon, Steve Cameron, told Express.co.uk last week that inheritance tax hikes or reforms could be used to help pay for the UK’s social care.

READ MORE: State pension age ‘highly unlikely’ to be reduced

“It wouldn’t be the most popular choice, a number of people really hate inheritance tax, but on the other hand, it is about this fairness point.

“It’s about is this a way of generating money to give the elderly a dignified later life with the care that they need.”

The Treasury currently collects £5.3billion a year from inheritance tax. Analysis from tax and advisory firm Blick Rothenberg shows that a one percent rise would raise around £130million extra a year, while a five percent increase would bring in an additional £650million.

The standard Inheritance Tax rate is 40 percent. It’s only charged on the part of your estate that’s above the threshold of £325,000.

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