Verdict of the Week

Inheritance Tax

When David Cameron announced that the Conservatives were to raise inheritance tax exemptions up to a million pounds on estates, it sent political shock waves right through the Labour Party and forced Alistair Darling to back track on previous Labour promises not to raise IHT because the economic climate wouldn't be able to sustain it.

But since the popularity of the Conservative move he was forced to double the inheritance tax threshold to £600,000 immediately and to £700,000 in a few years time, despite the fact the current economic climate is far worse than when he previously ruled it out. But whatever the economics of it, there is no doubt that it has ignited one of the oldest debates in politics: Should wealth be created by each successive generation, or should you be allowed to bequeath it from one generation to the next?

This was no better highlighted than when the nation's favourite culinary cupcake, Nigella Lawson, further fuelled the fire by revealing that she does not intend to let her children inherit her fortune and thinks that they should have to find their own way in the world. What makes this interesting is that her husband, Charles Saatchi, completely disagrees and cannot see why he should not be able to leave his hard-earned assets to his children.

Obviously the country wants to promote wealth creation to remain competitive, but not at the expense of those who work hard all their life creating it, only to have it all taken away again. This would create resentment and a sense of pointlessness.

The truly wealthy billionaires always seem to find new ways of being able to stash money beyond the reach of the taxman. It is the hard working, middle classes who seem to be hit hardest by paying Inheritance Tax on money they have already been punitively taxed on.

Miss Lawson has not revealed what she would rather do with her estimated £15m fortune, but she is known to support many worthy charitable institutions. She is, though, no stranger to the luxury, buying designer outfits, Taittinger Champagne, celebrity beauticians and employing people to shop for her.

There is no doubt that this is dangerous territory for Labour, after all it was Attlee's stinging inheritance taxes on the rich that sparked off the whole punitive taxation tag that has haunted Labour ever since. There has to be a very careful balance to setting the threshold or else the already fragile economy will further suffer.

The eCourt Verdict, then is that is has to be up to the individual as to whom you want to distribute your wealth to. It seems that Labour have played a clever game and raised the threshold to counter the Conservative move, but kept it low enough not to impact too harshly on the economy. The Conservatives have to keep the threshold promise at £1 million in order to distinguish themselves from Labour but they need to show more clearly how they are going to pay for it.

It just seems a shame that the only good change in the tax law to come along for decades means that the only way for us to enjoy it, is to die!


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