IHT tax breaks benefit those at the top

Tax Justice UK has published research showing how some of the wealthiest families in Britain are benefiting from up to £666m a year in inheritance tax breaks. The current law means that families with agricultural and business property can avoid paying any tax on these assets. The idea is to protect small farms and family businesses that might be asset-rich but cash-poor. But research shows that the vast bulk of these tax breaks are going to those at the top and the campaigning group is calling for a cap on the amount of relief available to estates of over £1m in a bid to curb use of the reliefs. The freedom of information request found that 261 families with agricultural property worth more than £1m shared £208m in tax relief in 2015/16, the latest year for which figures are available, representing 62% of the agricultural property relief given out that year. In the same period, 234 families with business assets worth over £1m shared £458m business property relief, representing 77% of the relief given out that year. Overall, the group says 71% of these two categories of IHT tax reliefs went to families with farm and business property worth over £1m. The analysis shows some 62 families with agricultural property worth more than £2.5m shared an approximate tax saving of £107m, which works out as an average saving of £1.7m per estate. At the very top, 51 families with business property assets worth over £5m shared an approximate tax saving of £327m, which works out as an average saving of £6.4m per estate. The report also points out that there is evidence to suggest these reliefs are open to abuse. In 2017 just 40% of agricultural land was purchased by farmers, down from over 60% in 2011, while investors have flocked to buy agricultural land and property, it states.