Magazine article The Spectator

The Only Good Tax Is a Death Tax

Magazine article The Spectator

The Only Good Tax Is a Death Tax

Article excerpt

Of the many victims of Gordon Brown's great tax raids over the past seven years, few have been treated as courteously as the elderly gentlefolk who will be affected by the new levy on 'pre-owned assets'. The new tax, proposed in an Inland Revenue discussion document last December, will catch those who have sought to avoid inheritance tax by gifting their home to their children or putting their property into trust, but who continue to live in the building as if it were still theirs. From April next year, such people will find their homes treated by the Inland Revenue as a benefit in kind and taxed accordingly. The tax will also affect people who gift money to their children to help them buy a home but do so with the intention of themselves living in the property.

Although the Chancellor confirmed the new tax in last week's budget, he did so with important concessions. Among those upset by the new tax was Lord Camoys, who before budget day was telling journalists that it might force him to sell his ancient Oxfordshire pile, Stonor Park. Yet in the event Lord Camoys was spared by the Chancellor because he put his property into trust back in the 1970s; the new rule will apply only to gifts made since 1986. The Chancellor also decided to exempt from the tax parents who have helped their children buy a home and who later move into that property because of infirmity.

Much though one feels concerned for Lord Camoys's well-being - and perhaps even more so for his butler, whose job might have been in jeopardy - it is not entirely clear why the non-landed gentry among us ought to think the closure of a loophole in inheritance tax law a bad thing. No one likes paying tax and there are many of us who would be overjoyed to see every Equality Officer sacked and every Lesbian Awareness Week cancelled in order to reduce the national tax bill. But if the Chancellor needs to tax anything, I can't for the life of me understand why a tax on inheritance is especially iniquitous.

Mention inheritance tax in some quarters, however, and you can be sure that faces will turn a vivid shade of puce and cries of 'Bloody communists!' will fill the air. People who happily pay their car tax and who take positive pride in employing a plumber who issues proper VAT invoices will go to no end of complications to keep the taxman from their front door after their death. To tax the living is one thing, they seem to assert, but to tax the dead is indecent.

But why? If it is deemed acceptable to force workers to hand over a proportion of their income to the government, why should it be wrong to demand that inheritors hand over the same proportion of their windfall? As it happens, inheritors have to hand over much less of their spoils to the taxman than workers have to surrender of their earnings. There was a time when Labour governments sought to target the idle rich with malice: when Jim Callaghan was Chancellor in the late 1960s - according to the Guinness Book of Records - a special charge in addition to surtax on investment income took the effective top rate of income tax to 136 per cent. Yet for anyone to throw the accusation of bolshevism at the present government is absurd. Nowadays, it is earned income which bears a heftier penalty. Earn your way in life and you are stung not only for income tax but for National Insurance contributions of ten per cent. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.