New figures show vast majority of inheritance tax breaks for farms and businesses go to the very wealthiest families
In 2016/17 the government handed out £800m in inheritance tax breaks for farmland and businesses. According to new figures released by Tax Justice UK today, almost 70% of this went to property worth over £1m.
Reports in advance of the budget suggest that the Chancellor Rishi Sunak is looking to restrict inheritance tax breaks. This would help to fulfil the Conservative manifesto pledge to limit the “arbitrary tax advantages for the wealthiest in society”.
Robert Palmer, Executive Director of Tax Justice UK said: “The Chancellor is desperately looking for money to help ‘level up’ left behind parts of the country. Restricting inheritance tax breaks to the most needy families would be a sensible way to do this.”
In June 2019, we published the report In Stark Relief, which exposed how the current system of inheritance tax breaks favours very well off families. The current system of reliefs is on top of the tax free allowance of up to £950,000 that is available to married couples. Tax Justice UK is calling on the government to review inheritance tax reliefs and consider a cap on the amount that can be claimed.
Agricultural property relief reduces inheritance tax on agricultural property at a rate of up to 100%, while business property relief reduces tax on business property and shares by between 50 and 100%. The special treatments for agricultural and business property are often justified as a means of protecting small family farms and businesses, but the reality is that most of this support goes to the wealthiest families.
The new figures released are based on a Freedom of Information Act request to HMRC.
Notes to editors
Tax Justice UK asked HMRC to provide information on the distribution of Agricultural Property Relief and Business Property Relief. 2016/17 is the most recent year that figures are available for. HMRC provided this information split by the value of the property that relief was claimed on. The figures in the table below are for the total value of the property, as opposed to the amount of tax saved.
The Marmot Review's finding that life expectancy for poorer women has decreased in the last decade is a stark illustration of what deep and entrenched inequality means in the UK today.
The UK is one of the richest countries in the world but the report highlights how social, economic and wealth disparities have led to a situation where poorer women's life prospects have gone backwards.
The Women’s Budget Group has launched the Commission on a Gender-Equal Economy in a bid to do something about this. They aim to develop an alternative economic approach so that that gender equality becomes a reality in the UK economy.
You can read Tax Justice UK’s submission of evidence to the commission here.
To submit evidence to the Commission on a Gender-Equal Economy, contact the Commission’s project manager, Marion Sharples: marion.sharples [at] wbg.org.uk.
In the wake of a general election that gave Boris Johnson a big victory, there are good reasons to think that the Prime Minister will open the spending taps. The current 80 seat majority owes much to Conservative success in winning former Labour strongholds, where voters want to see better public services.
In advance of next month’s budget the government is rumoured to be considering higher taxes on wealth to help fund promises to “level up” newly Conservative areas. Focus groups carried out over the last couple of months by Tax Justice UK and Survation found that this would be popular.
Today we’re publishing our report What's wealth got to do with it? that lays out what we found when we asked voters their views on the election, the state of public services and the role that taxes on wealth could play in supporting government spending. The groups took place in new Conservative seats in former Labour heartlands such as Blyth and Wrexham, as well as other areas including London and Reading.
More or less everyone we heard from was desperate to see investment in their communities and many supported higher taxes on wealth to help pay for this. No one we spoke to called for tax cuts.
There was strong support for ensuring that income from wealth is taxed at the same level as income from work. Increasing capital gains tax would achieve this. There was more qualified support for reducing pension tax relief on the highest earners and adding more council tax bands for the most expensive houses.
Whilst it’s possible to make the case for more progressive taxation, the public was put off by language bashing the rich. This was in part because the people we talked to had very different ideas of what “wealth” meant, with many seeing it as having enough to live comfortably, as opposed to being very rich.
People were also deeply skeptical about whether politicians will deliver on their promises. There was little enthusiasm for either Labour or the Conservatives.
There are lessons here for the Conservatives. “Getting Brexit done” resonated among voters fed up with the stalemate of Westminster politics in the aftermath of the EU referendum. People expect the government to be able to deliver solutions to the long term decline experienced in many of the places we visited.
And there are lessons for those seeking to be leader of the Labour party. The public will support policies to increase taxes on wealth but broad attacks on the rich go down badly with most voters we spoke to.
We will follow up this report with further focus groups and an opinion poll after the budget in March. This next stage will help us work out what messages about wealth and tax resonate the most with the public.
You can read and download the report here. This research was supported by the University of Sheffield and the Friends Provident Foundation.