In an effort to strengthen the position of the Conservative party ahead of the anticipated UK general election next year, Rishi Sunak's administration is looking into significant inheritance tax changes. 

The very dividing tax may be levied at a lower rate—it is currently 40%—or it could even be completely eliminated. The prime minister claimed he did not "comment on tax speculation" when asked about discussions regarding the matter within the administration. 

To address one of the five "people's priorities" he has promised to address before the subsequent general election, Sunak continued, "The most significant tax cut I can deliver for the British people is to halve inflation." 

Government insiders claim that Downing Street aides have discussed either reducing or eliminating inheritance tax, but no decision is anticipated until 2024. 

Tax reductions, according to Chancellor Jeremy Hunt, would be "virtually impossible" in his Autumn Statement on November 22, he stated last week. Any changes to inheritance tax are likely to be announced in the upcoming spring budget or as a promise in the Conservative election platform. 

Inheritance tax: What is it? 

People can increase their tax-free limit by £175,000 and transfer a total of £500,000 to their children or grandkids before IHT is imposed by using the "residence nil-rate band" to do so. A couple's share increases to £1 million. 

The estate of a deceased person, comprising all of their property, money, and possessions, is subject to inheritance tax (IHT), which is levied by HM Revenue & Customs. Estates with a value greater than £325,000 are subject to a headline rate of 40%. 

How much money is raised by inheritance tax? 

IHT payments have been rising significantly over the past few years, reaching an all-time high of £5.76 billion in 2020–21, the most recent full year of statistics, according to HMRC. It nevertheless only represents less than 1% of all tax receipts. In comparison, the VAT and income taxes contributed around one-third and one-fifth, respectively, of the total tax receipts in 2020–21. 

Recent monthly estimates released by the tax authority have revealed a persistent increase in IHT receipts. IHT is expected to bring in £7.2 billion in the current tax year, according to the independent fiscal watchdog Office for Budget Responsibility. 

Why would Sunak believe that getting rid of or reducing IHT would help him win the election? 

The Conservative Party is expecting that a shake-up will help it gain support in the many areas of the UK where there are significant numbers of estates that <span class="NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW152477342 BCX4" style="margin: 0px; padding: 0px; -webkit-user-select: text; -webkit-user-drag: none; background-image: var(--urlContextualSpellingAndGrammarErrorV2, url(" data:image="" svg+xml;base64,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"=&quot;));" border-bottom-width:="" 1px;="" border-bottom-style:="" solid;="" border-bottom-color:="" transparent;="" -webkit-nbsp-mode:="" normal="" !important;="" background-position:="" left="" bottom;="" background-repeat:="" repeat="" no-repeat;"="">owe IHT. 

Sunak and his advisors may believe that altering IHT won't annoy voters who aren't likely to pay it. IHT has been referred to as "unpopular," "unfair," and "Britain's most hated" tax, and despite the fact that only a small percentage of UK estates pay it, voter opinion polls show that it is unpopular, unfair, and unpopular. 

IHT is packed with exclusions and reliefs, giving the wealthy "lots of opportunities to avoid [paying] it" in reality, according to Dan Neidle, a tax lawyer and founder of Tax Policy Associates, who claims that this view is a result of this. 

Will people support removing IHT? 

Tax consultants reported that their clients had already responded favourably to news that the government was considering reducing or eliminating IHT. However, some urged caution, pointing out that any tax giveaway would likely need to be offset by tax increases elsewhere or spending reductions. 

According to Lucy Woodward, a partner at the accounting firm Saffery, "Any future government looking to abolish IHT would need to tread a political tightrope — balancing any voter goodwill gained with an almost £6bn hit to the Treasury." 

Liz Truss destroyed the economy with unfunded tax cuts a year ago, according to Darren Jones, the shadow chief secretary to the Treasury. Right now, Liz Truss is getting her way with Rishi Sunak. 

"Abolishing inheritance tax, which 96% of people never pay, would result in an annual unfunded tax reduction of £7.2 billion. The Conservative party poses the greatest threat to the economy. 

(Sources: telegraph.co.uk, ft.com)