18 January 2007
We received a petition asking:
“We the undersigned petition the Prime Minister to abolish inheritance tax.”
Read the Government’s response
Your epetition refers to a petition to abolish inheritance tax. You may not be aware that currently only 6 per cent of estates pay inheritance tax.
Inheritance tax is charged only on any net value of a person’s estate over and above the exemption of £285,000. The effect of this combined with the various reliefs available from inheritance tax is that 94 per cent of estates pay no inheritance tax whatsoever. This exemption will rise to £325,000 by 2009-10.
Nevertheless, inheritance tax is expected to raise around £3.6 billion this year - roughly equivalent to a 1p raise in the basic rate of income tax, for example. If inheritance tax were to be abolished, this revenue would have to be made up, either by raising other taxes or cutting public services.
Abolishing inheritance tax would therefore benefit a very few people at the expense of ordinary tax-payers.
As with all tax policies, the Government keeps inheritance tax under constant review.
Your views and those of the petition’s signatories have been noted.
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