How much Inheritance Tax would you pay under a Corbyn government?

October 10, 2017

Few would argue against the fact that Jezza is winning the showmanship race to number 10, and Theresa May’s ever floundering performances, which are more likely to see her win the wooden spoon in leadership terms, a title, until recently, shared between Michael Foot and Neil Kinnock, is akin to leaving the back door open whilst she nips to the chemist to buy some lozenges.

 

Most unfortunate that she’s making such a hash of things, particularly as when you speak to most people life doesn’t seem to be all that bad at the moment. Unemployment has slashed by around 50% in the last 9 years if you believe the stats. Yes student debt is outstripping any presumed benefit of getting a higher education, and anybody that isn’t already on it, has little prospect of getting on the housing ladder, but sterling is holding its own despite post Brexit vote wobbles and the only people I hear complaining are those watching reality TV wishing they could be on it. And before anybody starts throwing rotten tomatoes at me and shouting abuse about our elderly not being able to afford the electric bill, believe me I’m with you. That however, is an entirely different story.

 

The promises of increased government spending, including but not limited to, re-nationalising the railways and power (£185bn) water (£70bn) Royal Mail (£3bn) dispensing with PFI contracts (£60bn) means that Labour’s increased spending plans would come at a gargantuan cost – to the tax payer of course, as inevitably taxation would need to rise incredibly steeply to service the increased debt. Add into that a massive commitment to the NHS, housing, public sector pay rises and education, and you can add a few zeros to those numbers.

 

It’s doubtful even that the UK would come anywhere close to balancing its books, though a moot point anyway as I’m doubtful whether the Treasury, the Bank of England and other in the know government advisers, would allow such a radical state driven political and financial agenda of a hard-left government. But history does have a habit of repeating itself, even when it looks like sending us to hell in a hand cart.

 

I think most would be happy with a 50-55% top rate of taxation, but even the most apathetic amongst the electorate knows that it couldn’t, and wouldn’t, stop there. Of course corporation tax would go up, Labour have never tried to hide that as they push their ideology that money equals greed and the idea that those with the nouse to make a few quid are somehow the root of all evil. Let’s not forget that if we do ever actually go through with Brexit, and I think bizarrely Corbyn secretly wants that more than May, we could see lower tax receipts in the next few years and so more borrowing.

 

So where would we get the cash from? Well, successive governments both sides of the political spectrum have always kept a few stealth taxes up their sleeves that they think go unnoticed but actually hit the tax payer very hard. Most of us though have been sufficiently worn down enough over the years to the point of acceptance. Remember when everyone was up in arms at increased fuel prices? Then some bright spark pointed out that the largest element per litre that goes into your tank is tax, and arms went up even higher, for about 10 minutes, and then everybody went about their business.

 

Whilst there are undoubtedly some that think inheritance tax is a fair and equitable way of equalising the balance between those with and those without, notwithstanding that those with, who have generally built their wealth over their lifetimes with the specific aim of leaving it to their loved ones (remember IHT is already at an eye watering 40% of every pound over the nil rate band of £325,000) work very hard to achieve it, and have already paid their dues on their money and have then invested very wisely. Aren’t we all taught from a young age to save for rainy days?  It’s been a while since I left school but I don’t remember the saying being “save and we’ll have it off you when you die!”

 

Anyway, my point being that most consider inheritance tax at the current levels to be already very unfair. To raise it higher, in my opinion, would be daylight robbery. Yes there are ways to mitigate the burden with early planning, but don’t be surprised to see that watered down under a Corbyn government. Working in this area of law I naturally have an interest in any proposed inheritance tax changes, and I fear if Jezza gets his hands on the keys to number 10 unwelcome change will be afoot.

 

This information provided in this article is not intended to constitute legal advice and each relationship breakdown requires careful consideration in our view by a fully qualified Solicitor before decisions are made and before you embark on a certain course of action.

 

Nino Cuffaro

Penn Chambers Solicitors
0207 183 1485

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