There is a lot of noise being made in the media at present regarding the Leader of the Opposition’s tax arrangements, after his decision to attack the Conservative peer Lord Fink.
Ed Miliband, the leader of the Labour Party and the man hoping to get the keys to Number 10 Downing Street in May, is reported to have “conspired” with his mother and brother to reduce his father’s Inheritance Tax liability following his death in 1994.
The family are reported to have used a Deed of Variation, a legal vehicle by which the beneficiaries of an Estate can agree with the Executors to alter the terms of a Will. From personal experience working in Probate, there can be any number of reasons for making this variation, but the allegation against Mr Miliband is that the Deed was drawn up to reduce the Inheritance Tax bill.
Mr Miliband has denied the claims, but the former Director of Public Prosecutions, Keir Starmer, who is now standing as a Labour candidate in the safe seat of Holborn & St Pancras, has admitted that the intention of the Milibands was to reduce tax.
Whether the Deed was intended to reduce Inheritance Tax or not, I couldn’t possible comment. Even if it was, I for one would not attack Mr Miliband for doing so. It may highlight an apparent hypocrisy, but the real issue, for once, is not the standards of those who hold public office, but of the subject matter at hand.
Inheritance Tax is wholly unjust and must be abolished!
The death duty is levied on 40% above any Estate worth over £325,000, subject to certain exceptions. For married couples, this threshold could rise to as much as £650,000.
In March 2013, an apartment in Temple House in the City of London was bought for £1,050,000. Assuming it was not mortgaged, the net value for tax purposes would be in the region of £1.2m today. Even with the whole of the nil-rate band being transferred, that would leave £550,000 liable for tax. Under the current rules, that would equate to a whopping Inheritance Tax bill of £220,000 on the property alone, without taking into account any other savings, investments or assets.
Often when I am discussing Inheritance Tax with clients, I am met with constant criticism of the regime. Of course, as a professional, I must remain impartial on the politics of the subject. Not so as a political activist or blogger.
The Conservative Party attempted to make a great deal of capital with their pledge to raise the Inheritance Tax threshold to £1m. Now, that pledge sits within their ever-growing pile of broken promises – and, in any case, did not go far enough.
Every penny of an Estate that is taken in Inheritance Tax has already been taxed. When the property was bought, it was subject to Stamp Duty Land Tax. When the money was earned for the savings account, it was subject to Income Tax and National Insurance – and, when the interest accrued, it was subject to more Income Tax. When the shares were bought, they were subject to Stamp Duty. There may also have been Capital Gains Tax paid on additional properties. Yet the government believes they have the right to tax the income again.
Well it doesn’t wash with me – and it doesn’t wash with UKIP, either. Among their Issues, they say:
UKIP will abolish inheritance tax. Inheritance tax brings in under £4bn – less than a third of what we spend on foreign aid. The super-rich avoid it, while modest property owners get caught by it. It hits people during a time of grief and UKIP will budget in its 2015 spending plans to completely abolish this unfair death tax.
When the party released 100 reasons to vote UKIP with 100 days to go until the election, number 50 was to abolish Inheritance Tax. I also picked it up as one of my personal top 20 reasons. Patrick O’Flynn, UKIP’s economic spokesman said last year:
Instead of being envious of those who have inherited, our primary response should be to be respectful of those who earned the money, paid tax on it, invested it wisely and wish to pass it on to their chosen heirs.
Of course, those heirs are fortunate but envy at their good fortune should never be used as a justification for depriving property owners of the right to pass on the wealth they have created.
Tax was already paid on this wealth in life; it should not now be levied on death as well.
I could not have put it better myself. Inheritance Tax raises less than £4bn annually – less than 1% of the government’s income – and it hits the middle class harder than it benefits the national coffers.
There is a simple answer: abolish it. Get rid of it. Scrap it. Make it cease to be. Inheritance Tax is an unjust system and a modern society should not continue seeking to raid the graves of those who have contributed so much to the government and society in their lives.
It is what I believe and it is what UKIP promise: a 2015 UKIP budget would abolish Inheritance Tax.
Just one reason (of many) to vote UKIP on 7 May!