It’s sometimes hard to understand just what causes a long-running political debate to suddenly bubble up – and the current fight over inheritance tax (IHT) is one of those examples.
Surely the time for the public rammy was in 2024 when ex-chancellor Rachel Reeves changed the rules on family farms, or next April, when unused pensions will fall into scope of the tax?
But this week has seen a battle over IHT between Reform UK and the Conservatives, with Conservative leader Kemi Badenoch understood to be weighing up abolishing the tax altogether.
Reform’s Treasury spokesperson Robert Jenrick hit back by branding it a “desperate play”.
I am often accused of being a pretty lefty Tory. The words “dripping wet” have been used more than once about me and I’ve lost count of the number of times keyboard warriors have told me to go and join the Lib Dems.
But when it comes to this particular tax, I am as red meat as they come.
In truth, I don’t know why I feel so strongly about it. Like 95 per cent of the country, this tax doesn’t apply to me. I have no skin in the game.
My parents grew up in Glasgow council houses, my mum left school at 15 and my dad at 16. They worked hard all their life and were rightly proud to be the first generation of their families to have the security of owning their own home, and to see my sister and I as the first generation to go to university.
So, my parents had every right to feel a sense of satisfaction in giving us opportunities that they never had, but in terms of passing on wealth, my sister and I have never expected any lifechanging windfalls.
Even before the family home was sold to fund my parents’ dementia care – as per the rules – we knew its value was a long way below the threshold for a married couple where inheritance tax kicks in (£650,000 or £1m when leaving a main home to children or grandchildren).
My parents gave us our education and the ability to make our own way in the world, there was never any thought or expectation of a lump sum, and certainly no inheritance that would see us left with a hefty tax bill. So, like I say, I have never had any particular dog in this fight.
But I do feel strongly about it. The big picture view of taxation is that we each pay into the central pot and that combined total pays for those things that benefit society but that are beyond the means of the individual.
We all benefit from a fire brigade that puts the flames out in our neighbour’s house before the blaze spreads to the whole street, or from the local school that not only teaches our own children, but teaches the doctors and engineers that treat our injuries and build our bridges.
So the social contract is that we pay tax to benefit society, yes, but also that the societal benefit will positively impact us as well. We pay and we get back, not always in equal measure but the road does run both ways.
And we do pay. Brits pay tax on what we earn, we pay tax on what we save, we pay tax on what we sell and we pay tax on what we spend. It seems to me an inherent unfairness that we are also expected to pay tax when we die. What, precisely, does the state do for our corpse in return?
I hate being some sort of common cliché, but it seems most of the country are roughly where I am on this one. The polling company, YouGov, has repeatedly asked the public for their views on IHT.
More than three quarters of all people are against increasing the 40 per cent rate at which it is charged, more than two thirds want to increase the £325,000 threshold at which it starts needing to be paid and more than half the country wants it scrapped altogether.
And there is a very clear reason why. Voters – even those who don’t pay very much attention to the details of any particular policy – have an innate sense of natural justice. And IHT just doesn’t feel fair. If you’ve made your money and always done the right thing by paying your taxes in life, why should the state be allowed to step in and take a chunk once you’ve died?
Even if we will never earn or save enough to hit the threshold for IHT (and, remember only about 5 per cent of people ever do) there is something innately human about the wish to pass something on to your children when you are gone.
So, I may be in the 95 per cent unaffected by IHT – either when my parents die, or when I do – but I am very strongly with the British majority who sees it as an unfair tax and wants it scrapped.
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