Did you know? Ever since the Labour came to power in 1997 the coffers has been raking in £1billion per annum from inheritance taxes according to MPs reports. The bad news is that this year mourning relatives, the number of which has more than doubled since the Labour came into power, may have to shell out as much as £2.9billion on the possessions of their loved ones.
1997, the Inland Revenue - now called HM Revenue and Customs – garnered £1.56billion in inheritance tax. Amazingly, last year the amount collected skyrocketed to £2.5billion, a massive 60 per cent increase, and the figure is expected to touch £2.9billion this year. During the Labour’s first year in power, the number of estates paying the tax was just 15,000. By this year, it has soared by 113 per cent to 32,000, and next year an estimated 37,000 families are likely to be affected severely.
The MPs report attributes the massive increase in tax payments to two crucial factors: the blossoming property market and the reluctance of Chancellor Gordon Brown to match house price rises with increases in the threshold at which the 40 per cent tax kicks in. The starting level for inheritance tax is currently at £275,000 which ironically is well below the cost of millions of homes across the country. Further, the report accuses taxmen of worsening the burden on bereaved families by overloading them with composite and redundant paperwork.
According to the Public Accounts Committee, most families had to pay the inheritance tax before even before they were granted probate. This forces most to take out high-interest loans to meet the cost.
In their report, the committee claimed that around one third of inheritance tax returns were filled in by relatives rather than qualified solicitors which should be a prerequisite as the forms contain very technical and composite language which makes form filling a very tedious task for the common man.
Edward Leigh, the committee’s Tory chairman, expressed concern over this. “Ones who are already suffering from the pain of having lost a loved one are burdened with unnecessary paperwork and some changes are needed to make life easier for these anguished human beings.”
The committee had previously recommended reducing the rate of the tax from 40 per cent to 10 per cent or increasing the threshold to £1million. But nothing of that sort has come into effect as yet.
Suggesting that a website could be created giving information and advice to those who have lost a dear one, the committee felt it could allow inheritance tax and probate returns to be filed online.
Posted
on : Wed, 13 Jul 2005 10:50 GMT | Investments News
By : Paula Jenkins
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