Inheritance tax

The Conservatives big announcement at the start of their conference was a pledge to cut inheritance tax. A lot of the discussion over this has been about how few (or how many) people will actually benefit from it. That’s a discussion for somewhere else – here on UK Polling Report we don’t care whether something is intrinsically a good or bad idea, we only care what the public think about it and how it’s likely to affect public opinion.

Polls consistently show that inheritance tax is surprisingly unpopular even when compared to other taxes – I’ve posted before about it and it never fails to surprise me. Firstly it is seen as unfair. A Populus poll for the BBC back in 2006 found only 25% of people thought “having an inheritance tax on the value of the assets people leave when they die” was fair. A MORI poll in 2004 fund 69% of people thought it was unfair to tax property after death.

So what, you may say, most people don’t like taxes anyway, what matters is whether it is seen as more unfair than other taxes. A YouGov poll for the Taxpayers Alliance earlier this year asked people to say whether they thought particular taxes were fair or unfair on a scale of 1 to 5 – 1 being very fair, 5 being very unfair.

Inheritance tax came out very near the top – 65% of people thought inheritance tax was unfair, just behind council tax on 67% and ahead of the BBC licence fee on 63%. Compare this to Air passenger duty 45%, income tax 41%, national insurance 34% and taxes on cigarettes and beer 29%. In other words, no one likes taxes, but people think it is fair to tax people based on their income, and based on doing things that are bad for them or the environment. They don’t think taxes like the inheritance tax or council tax are fair.

Does that mean people would like to see it go? In Populus’s 2006 poll they asked if people would prefer inheritance tax to be replaced by an extra penny on income tax, 59% of people said yes. 76% said if there must be inheritance tax, it should affect only the very rich. A YouGov poll last November asked people what they would about various suggested tax cuts – 70% approved of the abolition of inheritance tax.

Once again, it’s easy to tell a pollster you want to see a tax repealed or cut – would they prefer to see inheritance tax cut rather than other taxes? An ICM poll for the Taxpayers Alliance last summer asked people to rate different taxes on how much they’d like to see them cut – again, unsurprisingly people wanted them all cut, butthe interesting bit is how they compare to each other. The tax people wanted to see cut most strongly was council tax (also the one they see as most unfair). It was followed by inheritance tax – a cut in inheritance tax being more popular than an basic rate income tax cut or an increase in personal allowances.

It’s strange that a tax that affects so few people each year seems to be so resented. I suspect it is unpopular not because people actually pay it, but because they imagine they might have to pay it one day. People hope they might receive a great big inheritance one day or, less morbidly, that they’ll be in a position to leave their children financially secure when they leave, they look at house prices now, think how high house prices might actually be when the day finally comes when the lawyers are looking at the value of their estate (or their parents’ estate), and they don’t like the thought of giving lots of it to the government.

So – that’s answered the first part. An increase in the threshhold of inheritance tax is likely to be popular. On the second part of the question – will it change public opinion? – I should add the caveat that just because something is popular, doesn’t mean it is an important issue for people. Inheritance tax is unpopular yes, but is it the sort of issue that really decides elections? Nope.


57 Responses to “Inheritance tax”

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  1. John T

    I am with Anthony on this Brown has a bit of a track record of prempting the Tories so a Domicile charge and a modest lifting of IHT are possibles for the next budget if there is no election.

    As to the media educating people the likes of Newsnight and the Guardian do cover things like this quite well, but people generally don’t watch or read them.

    That’s hardly the Medias fault and to go against what people want to watch/read is pretty much commercial suicide.

    Peter.

  2. MAy I retract Media and replace with “politicians”? (politicians who contribute to sites like this excepted)
    I might well have a complete mental block over this – I do appreciate what Anthony is saying, but for the Govt to steer clear of this as an issue because IHT is unpopular is ridiculous. They could easily make a detailed case for their IHT threshold (it has shot up in recent years from £250k?), they’re in Government, and shouldn’t be scared to explain unpopular taxes. Lead the opinion polls, don’t follow them!
    (I won’t bring this up again on the more current posts, as I’m getting sick of the sound of my own voice now!)

  3. I disagree entirely that proposing to cut Inheritance tax won’t be an Election winner, for the Tories.

    I think it will.

    There. I’ve started, in a fairly controversial manner, so I’ll finish similarly.

    Firstly I want to talk about figures.

    I have read and heard discussed, this week, just how many people could be affected by this proposal.

    And it is not a minority figure.

    37% of the poulation would be affected, and considering there are 60 Million souls living in Britian today, that is a huge amount of us.

    Now, combined with the proposals on stamp duty, that is a real vote winner for younger People.

    And for anyone who has had to pay Mr Brown’s whopping 40% of Inheritance tax duty, this proposal cannot come too soon, to prevent others sufferring the same way.

    It is point blank unfair.

  4. I have to disagree with you, Anthony, sorry but I do.

    Your points were valid up to where you say that a “cut” in Inheritance Tax would only benefit ” a few millionaires and dead people ”

    Now firstly Osborne’s proposal is not for a ‘cut’ but for a rise in the threshold of In. Tax, to £1 Million.

    Secondly, since Labour lowered the threshold to £250K, before people are taxed 40% of their inheritance, that is going to affect a large amount of people.

    Millions of people, not some rich minority.

    Use your loaf !

    If the threshold currently WAS the $i Million the Tories are suggestin, then that would only affect about 2% of people.

    But as the threshold is £250K, and due to rise soon to £300K, then this is surely going to affect an awful lot of hardworking folk.

    THe average House price in the Uk was recently published as being £210,000.

    So that would mena that the average person, by the time they have earned their full potential, and maybe add a bit of savings in there, and you have the fact that bloody most of u, in the lower-middle class bracket would be affected.

    That is, most of u average people.

    People have been burying their heads in the sand about In. Tax, I reckon, because though it is unjust and it stings, we British do not like to complain.

    But we have managed to bring Supermarket prices down, well Wal-Mart has helped there a bit.

    So why don’t we get all outraged, like our American cousins would, and say enough is enough, Mr Brown !

    Whether you’re Tory, Labour or Liberal, this is a very steep tax.

    40% is nearly 50%. That’ nearly half.

    Almost an armful, to paraphrase the late Tony Hancock. In fact, more than an armful.

    I agree with Mr Osborne that the threshold should be raised, and the base percentage of 40% should be reduced too, to 25%.

    Taht would a much fairer set of figures altogether.

  5. The whole debate on Inheritance tax reminds me of that Victoria Wood joke to demonstrate British politeness. The one about the fictional older Woman who was unfortunate enough to be trapped in the same train carriage as an amorous couple, who became engaged in full intercourse, next to her.

    She coughed twice politely, to no avail, and then pretended not to notice, for the duration. Looking out of the window and so forth.

    It was only when they had concluded, and one of them lit up a post-coital cigarette, that she leaned over, and reprimanded them gently:

    ” Excuse me, but I think you’ll find this is a non-smoking carriage. ”

    That, for me, sums up our attitude to Gordon Brown’s inheritance tax.

    We’ll let the Bugger tax us 40% of the estate, what the deuce, he’s a nice man.

    But we’ll kick up a fuss about the smoking ban, never mind that this present Government steals our money left, right and centre, so to speak.

    I agree with the old Building Society slogan:

    ” let’s sort money out ”

    And the sooner we do that, the better, say I.

    Excuse me, but I despise Mr Brown nearly as much as I loathe that Kate Nash person.

    But to paraphrase Ms Nash, herself:

    ” yeah Gordon, your Opposition Party is so much fitter ”

    Yeah mate, Whatever. Estuary English. Innit?

    Actually, no. I prefer to converse in the Queens.

  6. I just want to correct the figures, James, as this is not the p[lace to air differences of opinion…
    £300k is the current threshold. It is about to rise to £325k. After that, 40% is taken in tax. If it is the case that the majority of us is worth £325K or more, then fine, (we should count our lucky stars). It’s the degree to which those at the upper end of the aid benefit from this proposal that I can’t believe the voters don’t object to.

  7. George T , again I stress I don’t distrespect your position, but I think it is unbelievable that someone worth, say £500k, who would benefit to the tune of £70k would consider themselves equal to those worth £1m (£500k is only half that)who would benefit by £270k. Reflection on the figures will lead people to realise that this proposal represents the most regresive tax idea that Osborne could think of.

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