Vale & West Chartered Accountants Blog

Richest families dominate use of IHT

According to new figures, some of the UK’s wealthiest families are benefitting from up to £666 million a year in Inheritance Tax (IHT) reliefs on agricultural land and business property.

The research, conducted by not-for-profit campaign group Tax Justice, found that 51 of the UK’s wealthiest families, all with business property wealth exceeding £5 million, shared an approximate tax saving of £327 million, equating to an average of £6.4 million per estate, in the 2015/16 tax year.

Meanwhile, over the same period, 62 families with agricultural property worth more than £2.5 million shared an approximate tax saving of £107 million, which works out as an average saving of £1.7 million per estate, and 234 estates with business assets of more than £1 million claimed £458 million, which accounted for 77 per cent of the total relief.

The estates also benefitted from a concession called business property relief (BPR), which provides up to 100 per cent IHT relief on the transfer of business assets.

Due to these findings, Tax Justice is urging the Government to cap the amount of relief available to estates of over £1 million.

In its report, the group also recommends reviewing the fairness and effectiveness of IHT reliefs and ending BPR relief for individuals who have an Alternative Investment Market (AIM) share and are able to hold the money in a tax-free individual savings account (ISA).

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