The Institute of Chartered Accountants England and Wales (ICAEW) has called for inheritance tax to be scrapped.
Speaking at a fringe event at the Conservative party conference in Birmingham on Monday, Michael Izza, chief executive of ICAEW said: ‘We in our manifesto…are actually calling for [inheritance tax] to be scrapped.’
He said the inheritance tax did not achieve its intended purpose because the wealthy have found ways around it and it has only raised 1% of revenue.
Izza said: ‘Now the reason why, is because it doesn’t achieve its intended purpose. It currently makes up nearly 10% of the UK tax code, it raises less than 1% of the revenue.’
‘It’s not fair, because often the people with the highest assets are those who find it easier to avoid, through trust structures and other complicated initiatives. It falls disproportionately hard on the middle class.’
Mark Littlewood, director general of the Institute of Economic Affairs, said that treating inheritance tax as capital gains tax could be a halfway solution to the problem.
He said: ‘I’m intrigued by the idea we could treat [inheritance tax] as a capital gain.’
‘Here’s a thought for you, if we treat it like capital gains, don’t tax the estate, tax the shares in the estate. There is a difference between leaving £5 million to one person, and leaving £5 million but dividing it 50 ways. I don’t understand why you tax the estate if you are dividing your estate into 50 or 100 or 1,000 different pieces. The beneficiaries are not getting colossally rich on the back of your death.
‘I think that is a halfway house and I don’t think that would complicate the tax system.’