The UK is in the midst of a cost of living crisis, leading to mounting pressure on the Government to address the urgent economic issues. Inflation reached a 30-year high of 7 percent in March, coming after Britons were hit with a National Insurance hike last year. Wealth taxes have also been a source of anger, as demonstrated by recent reports. As Telegraph Money reported last week, HMRC has issued back taxes for illegitimate property transfers, while others have been caught out by complex rules and volatile markets.
This comes as part of a £608million Inheritance Tax crackdown, impacting almost 2,000 families who had attempted to sidestep the divisive 40 percent levy.
Families who thought they had legally avoided the duty by making tax-free gifts were told to repay thousands of pounds after being found to be in breach of so-called “gift with reservation of benefit” laws.
Gifts survived for seven years are usually exempt from Inheritance Tax, but if the person who gave the gift is later discovered to have benefited from the asset in any way, HMRC can demand payment to the tune of hundreds of thousands of pounds.
Experts believe more and more people could be caught out by the rules.
Danielle Boxall of the TaxPayers’ Alliance lobby group told the Telegraph that families looking to soften the blow of the ongoing cost of living crisis could resort to strategies that backfire.
She said: “Not only does the frozen Inheritance Tax threshold hit families’ savings, which have already been taxed once, but the reams of reliefs add a great deal of unnecessary complexity to the tax code.
“Never mind raising the Inheritance Tax threshold, the Government should abolish the tax entirely and show a more compassionate attitude towards the bereaved.”
During the pandemic, wealth taxes became a subject of debate.
READ MORE: Sunak’s brutal 55% pension tax is robbing pensioners – scrap it
In a search for solutions to a crisis over energy prices, and the cost of living more widely, Chancellor Rishi Sunak said a windfall tax, as advocated by Labour, was possible if energy companies did not properly reinvest bumper profits.
Asked if he backed the chancellor’s idea, Kwasi Kwarteng told Sky News: “I’ve never been a supporter of windfall taxes. I have been very clear on that publicly, I think it discourages investment and the reason why we want to have investment is because it creates jobs, it creates wealth and it also gives us energy security.”
Questioned about whether he disagreed with Sunak, Mr Kwarteng said: “My view is that, and I’ve said this publicly many times, a windfall tax will act as a disincentive to invest and we want to see investment.”
Meanwhile, Labour has argued that a one-off 12-month windfall levy would contribute £1.2billion towards wider efforts to reduce energy bills.