The UK Inheritance Tax Debate
When a resident of the United Kingdom dies, his or her estate may be depleted by the payment of significant levels of inheritance tax. Though not unique to the UK, inheritance tax is a subject of concern for a great proportion of the British population who expect to receive assets left to them by aging family members and friends.
Critics of inheritance tax say that the burden on beneficiaries is too great. When it comes to assets like a house that is intended to remain within a family, the tax burden of retaining the property rather than selling it may be too great for the younger generation to bear. It is expected that if inheritance taxes are increased further, the result will be diminished returns, due to increased focus on avoiding taxation, both by legal and illegal means.
Estates of limited assets are normally exempt from the payment of British inheritance taxes. Currently, estates valued at less than 325 thousand pounds are not subject to inheritance tax. However, any estate value greater than this threshold will be subject to inheritance tax at a rate of 40%.
Prime Minister David Cameron has promised that, if re-elected, he will raise the threshold to a significant one million pounds. On the other hand, some individuals actually propose applying inheritance taxes to all estates, regardless of size, as a means of preventing further increases in the rate of taxation.
Reports from jurisdictions where inheritance tax has been eliminated altogether suggest that these changes have been welcomed by residents who are happy to receive assets of a magnitude more similar to those possessed by the deceased while living. However, in a place like the United Kingdom, where the government received 3.4 billion pounds last year through inheritance taxation, the implications of relieving citizens of tax payments made on estate assets are unknown.
The average Canadian can expect to receive an inheritance of nearly 100 thousand dollars and will benefit from the fact that our estates are not subject to a general inheritance tax.
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