London (Parliament Politics Magzine) – UK Chancellor Rachel Reeves is set to hit aristocrats and other rich property owners with a £1 billion inheritance tax raid in her Budget.
Rachel Reeves is peeking at reforming business relief, a loophole which permits the rich to halve their inheritance tax bills. She could also manage agricultural property relief (APR), which is developed to help farmers pass land on but has increasingly been employed by the wealthy to avoid inheritance tax.
What changes are proposed for inheritance tax loopholes?
The Treasury will pledge exemptions for small businesses and family farms, amid worries from agricultural groups over the future for British farmers. The Chancellor will express abolishing the loopholes is the “fair way” to boost money from the wealthy.
Aristocrats will be the most impacted, as they own 30 per cent of England’s land. The Country Land and Business Association (CLA), expressed the changes could
“threaten our rural way of life, and the nation’s food security”,
if not applied properly.
How does Chancellor Reeves plan to raise £35 billion?
The modifications would be part of a bid to boost taxes by as much as £35 billion, in what would be the largest tax-raising Budget in history. Other views said to have been considered include expanding the seven-year rule. At present, if a living person offers a descendant a gift, the descendant does not have to spend inheritance tax on it unless their parent dies within seven years.
Ms Reeves is peeking at extending the threshold to 10 years, providing three more years’ scope for the taxman to access cash. Business relief currently permits the rich to halve inheritance tax bills, at an expense to taxpayers of about £2 billion a year. Last year more than 3,000 estates were exempted from more than £1.4 billion in business relief. APR totalled an additional £400 million. However, by exempting small businesses and family farms, the Chancellor’s reforms would increase around £1 billion in total.