Jeremy Hunt, the former chancellor, warns that Labour’s potential “double death tax” could contribute 10s of thousands to families’ inheritance tax bills. Presently, the capital profits tax is swept out after death, but Labour may delete this indemnity. This change would affect families’ success in investment containers and second properties, with potential tax bills rising by tens of thousands.
Analysis by Quilter suggests that a family inheriting a £1.5m estate with a £111,000 gain could pay an extra money of £26,000 in tax. Capital gains tax rates would apply, ranging from 10% to 24% depending on the benefit type and taxpayer status. The worst hit would be families with large benefits that have significantly increased in value, potentially facing tax bills over £100,000. The Resolution Foundation has said that capital gains tax “forgiveness” on death “creates a ‘lock-in’ effect that can distort decisions about when to dispose of assets”.
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Introducing capital gains tax on death could increase in amount £1.6bn annually, according to the Institute for Financial Studies. However, Labour refuses plans to raise taxes, stating their first choice is growing the economy. Their plans involve closing specific tax loopholes but do not need to increase taxes.
Experts state that this potential change could damage decisions about when to dispose of benefits and may help to protect families from keeping properties in the family. The current inheritance tax system already arrests many families, and adding capital gains tax could result in a significant financial hit for those who are not ready for the proceedings.
At last, Labour’s potential “double death tax” could significantly impact families inheriting benefits, adding tens of thousands to their tax bills. While Labour promised not to plan to increase taxes, experts warn of the potential results of introducing capital gains tax on death.
By Yahoo news
