HMRC could 'increase' threshold lifting millions of people 'out of tax bracket'

A former HMRC inspector has set out a new policy that could replace inheritance tax. Stefan Fielding, tax director at accounting firm Sapphire, said the "divisive" tax could be reformed or scrapped over the coming years, with the potential for changes to the policy in the upcoming Spring Budget.

He told Express.co.uk : "Some contend that a wealth tax would result in a fairer redistribution of wealth and place the burden of responsibility on to the owners of valuable assets, as opposed to beneficiaries of their wills.

‌"Whilst it is easy to see the case for a wealth tax, the reality of operating it is complex and a significant burden would likely be placed on HMRC to monitor it. A wealth tax would also introduce an administrative headache to asset owners who would need to produce annual valuations of their assets which is costly, both in terms of time and financially."

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Inheritance Tax (IHT) is a tax on the estate of someone who has died, including all property, possessions and money. The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the tax-free threshold which is currently £325,000.

He added: ‌"On top of this, some assets are inherently difficult to value. Shares in owner-managed businesses, fine art and high-end property can be difficult to value and an element of subjective judgement is required." He said: "‌The most probable way that inheritance tax may be reformed is by increasing the thresholds at which inheritance tax is paid. The tax-free threshold is currently £325,000 (increasing to £500,000 if you own your own home).

‌"Increasing these thresholds will lift a great number of people out of the inheritance tax bracket, and this may be a better compromise than scrapping it all together. ‌It would be warmly received by those whose estates would no longer be subject to inheritance tax, whilst preventing the political backlash that would likely accompany eradicating inheritance tax in its entirety."