Matthew Lynn in the Telegraph reports that the government has released figures this week indicating that it will receive an inheritance tax windfall of an additional £800M this year as a result of the pandemic. This comes at a time when many taxes such as corporation tax, fuel duty and air passenger duty are in decline, but inheritance tax is booming as a result of the excess death toll. Inheritance tax is of course a 40% tax on death, on accumulated income which has already been heavily taxed on receipt, often at 40% or more. Thought of like that, it is a wonder anyone has anything left!
Lynn argues that it is morally reprehensible for the government to profit handsomely from the extra deaths, and that under normal circumstances, in their later years many people take steps to minimise the inheritance tax that their estates would otherwise have paid. Unfortunately, many people who have lost their lives prematurely and unexpectedly to Covid have not had the opportunity to do so. As a result, his suggested solution is that rather than the government gladly accepting the inheritance tax windfall, the estate of anyone with ‘Covid 19’ on their death certificate should be exempt from inheritance tax. However, with public finances under extreme pressure and borrowing soaring, unfortunately this idea seems unlikely to be implemented.
In addition to the increased inheritance tax take, Lynn points out that the excess Covid deaths will also benefit the government elsewhere. State pensions are forecast to cost £600M a year less because there will be fewer old people, even without taking into account the reduced cost of health and social care that the government will be required to fund.
The full article can be found here, behind the Telegraph’s paywall: https://www.telegraph.co.uk/business/2020/11/27/governments-800m-death-duty-windfall-moral-outrage/
Chiltern Wills is a Will writing business based in Beaconsfield and run by former London solicitor Rebecca D’Arcy. Call us on 01494 708688 or complete a Free Online Enquiry to discuss inheritance tax planning.
