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With political party conference season upon us and the Tories scrambling for ways to appeal to voters and lessen Labour’s lead in the polls, abolishing inheritance tax has again been floated as the next government giveaway.

So, how many people are paying inheritance tax and how much are they paying: will abolition allow grieving loved ones to save thousands or is this a boon to the homeowning Tory base?

Or is this just a sensible policy measure benefitting both groups, given house prices are still more expensive than they were before the pandemic and inflation stood for months in double digit territory?

With widespread dislike of inheritance tax, the incorrect belief among taxpayers that they’ll fork out because of the toll, calls for abolition and reform coming from all corners, yet only small percentages of assets being affected by the charge, Prime Minister Rishi Sunak may have landed on a policy that few would miss in its current form.

It is after all what Tories call the “most hated tax”.

While only a small percent pay inheritance tax, new data from the Institute for economic research, Fiscal Studies (IFS) says the sums could be significant to some: if all non-spousal inheritances transferred next year were equally shared between all 25 years olds, each would receive around £120,000.

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The prime minister refused to comment on inheritance tax “speculation”.

How many are paying?

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Latest available figures from the tax man, His Majesty’s Revenue and Customs (HMRC), show 27,000 estates paid inheritance tax in the year 2020 to 2021. An estate encompasses a person’s assets: their house, any jewellery or other valuables they might own. Though inheritance tax isn’t paid on pension and insurance money.

For context, more than half a million (577,160) people died in England and Wales in 2022.

Essentially, less than 4% (3.73%) of estates paid inheritance tax in the 2020 to 2021 year.

And the number of estates paying inheritance tax is up by 4,000 people since the previous tax year, 2019 to 2020, as the numbers of people who died increased during the COVID-19 pandemic.

What are they paying?

At present, inheritance tax is charged at 40% and applies to estates worth more than £325,000. There are, however, allowances that can mean its only paid on more valuable estates.

If a main residence is being passed to children or grandchildren a £175,000 allowance is added, meaning only amounts of £500,000 are subject to inheritance tax. Married couples can share that allowance, doubling it and allowing a £1m estate to be passed on to children tax free.

Sunak is said to be looking at reducing the levy in the budget in March, working towards an eventual abolition.

Official HMRC statistics show £5.76bn of inheritance tax liabilities were racked up in the 2020 to 2021 tax year. This was higher than usual – to the tune of £800m, a 16% increase – as COVID-19 caused a greater number of deaths that year.

This year more than £3bn has been generated in just four months, provisional HMRC figures showed, and June broke the monthly record.

While new highs of inheritance tax are coming in, other forms of wealth tax, like capital gains tax (CGT) – the levy on things like income from a second property or shares – are also reaching new highs, greater than inheritance tax.

CGT added £16.7bn to the public purse in the 2021 to 2022 tax year and came from 94,000 taxpayers, HMRC said.

Meanwhile the inheritance tax take from April to August this year was £3.2bn, £300m higher than in the same period a year earlier as asset values have increased and rate rises meaning more interest is charged on late payments to HMRC.

It is worth noting that tax receipts are up across the board. This is not unique to inheritance tax.

A combination of higher wages and more expensive goods (again, due to inflation) meant income tax, national insurance and capital gains tax yields were up. Overall HMRC said £19.8bn more was taken in from April to August this year than last, adding up to a total of £331.1bn.

The cost of abolition is £7bn, according to analysis from the IFS.

Who’s paying?

Notionally people passing on estates worth more than £500,000 would pay, but the figures demonstrate only a smaller number of people, in practise, do.

In theory, rich people’s estates should be inheritance taxed but there are ways around paying. People with legal or tax advisers can limit their liability.

For example, gifts of up to £3,000 in value can be given tax free. This may be possible for (and benefit) a wealthier person giving away collectors items but not a middle income earner passing on the family home.

But commentators say the exchequer could get even more from inheritance tax soon.

Research from investment service provider, Wealth Club, says the number of people paying inheritance could rise by 50% in a decade and £9bn could be yielded by 2029.

“The combination of rising house prices and inflation will push up both the number of families paying inheritance tax and the amount they pay”, said Nicholas Hyett, Investment Manager at Wealth Club.

The IFS goes one further in its new analysis and says around £15bn could be gathered from inheritance tax in a decade’s time.

Who would benefit from inheritance tax cuts?

People who may not think of themselves as wealthy, have come in scope of inheritance tax. These people could benefit as house prices have grown and the recent inflation cycle brought prices up.

Inheritance tax bands have been frozen since 2009 and they’re not due to be revised until 2028 even though most prices haven’t stayed at 2009 levels.

Those who didn’t have a spouse to share tax credits with or who do not wish to pass their estate to a child or grandchild, missing out on the exemptions in the process, are the kinds of people in line to benefit.

Research by the IFS says around half (47%) of the benefit of banning inheritance tax would go to those with estates of £2.1m or more, who represent the top 1% of estates.

That group would benefit from an average tax cut of around £1.1m, IFS figures show. The vast majority (roughly 90%) of estates not paying inheritance tax would not be directly affected by the ban.

Who would not benefit, according to the IFS, are people without assets. By the time inheritances arrive, the think tanks says, wealth inequalities are already well entrenched and hard to undo.

In other words, unless you already have rich parents, inheritance tax isn’t much good to you.

The question of whether binning this policy is designed to benefit people like Rishi Sunak, who are wealthy, depends on what the tax is replaced with, or not.

Why might it be in line for the scrap heap?

Inheritance tax is widely disliked.

Despite the data showing less than 4% of estates end up paying the levy, the public believe they’ll be affected, according to YouGov polling done for The Times.

Nearly a third (31%) of survey participants thought their assets will be valuable enough to pay inheritance tax and 15% thought they themselves would have to pay the tax on things they inherit.

Just 5% said the threshold for inheritance tax was £1m.

That’s not to mention the objections of politicians. It’s not the first time the Conservatives have tried to scrap the toll. Not three months have passed since the last time Tories flew this particular policy kite.

Labour in recent days have been staunch in their opposition to getting rid of inheritance tax but only because it is an unfunded tax cut.

Even left leaning think tank, the Resolution Foundation, and the IFS, want the tax gone.

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What’s happening with inheritance tax?

Alternatives

Both the Resolution Foundation and the IFS have ideas about what should fill its place.

For its part the Resolution Foundation proposes a lifetime allowance for everyone. Each person can inherit up to £125,000 over the course of their life and after that you should pay a tax rate of 20% on what you get for anything up to £500,000, for anything higher than half a million received after the £125,000 cut off, a tax rate of 30% should be applied.

Gifts and assets transferred between spouses should be exempt, the foundation proposes.

The financial benefits would better than inheritance tax as it currently stands, according to analysis the think tank has done: £5bn more could be collected a year, compared to the amount gathered in the 2020 to 2021 year. That would equate to tax revenues of £11bn.

Another positive, the Resolution Foundation says, is everyone has a lifetime benefit and so wealth is more likely to be spread around, among families for instance.

A further option, proposed by the Wealth Club, is to keep the tax as is but just raise the points at which you’re taxed in line with inflation.

Either way, voters are unlikely to hear an announcement on the tax future until Sunak’s Tory Party conference speech in early October or the government’s autumn statement in November.

Sources have told Sky News that, despite reports, no changes will be made this year.

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US trade war: The state of play as Trump signs order imposing new tariffs – but there are more delays

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US trade war: The state of play as Trump signs order imposing new tariffs - but there are more delays

Donald Trump’s trade war has been difficult to keep up with, to put it mildly.

For all the threats and bluster of the US election campaign last year to the on-off implementation of trade tariffs – and more threats – since he returned to the White House in January, the president‘s protectionist agenda has been haphazard.

Trading partners, export-focused firms, customs agents and even his own trade team have had a lot on their plates as deadlines were imposed – and then retracted – and the tariff numbers tinkered.

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While the UK was the first country to secure a truce of sorts, described as a “deal”, the vast majority of nations have failed to secure any agreement.

Deal or no deal, no country is on better trading terms with the United States than it was when Trump 2.0 began.

Here, we examine what nations and blocs are on the hook for, and the potential consequences, as Mr Trump’s suspended “reciprocal” tariffs prepare to take effect. That will now not happen until 7 August.

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What does the UK-US trade deal involve?

Why was 1 August such an important date?

To understand the present day, we must first wind the clock back to early April.

Then, Mr Trump proudly showed off a board in the White House Rose Garden containing a list of countries and the tariffs they would immediately face in retaliation for the rates they impose on US-made goods. He called it “liberation day”.

The tariff numbers were big and financial markets took fright.

Just days later, the president announced a 90-day pause in those rates for all countries except China, to allow for negotiations.

The initial deadline of 9 July was then extended again to 1 August. Late on 31 July, Mr Trump signed the executive order but said that the tariff rates would not kick in for seven additional days to allow for the orders to be fully communicated.

Since April, only eight countries or trading blocs have agreed “deals” to limit the reciprocal tariffs and – in some cases – sectoral tariffs already in place.

Who has agreed a deal over the past 120 days?

The UK, Japan, Indonesia, the European Union and South Korea are among the eight to be facing lower rates than had been threatened back in April.

China has not really done a deal but it is no longer facing punitive tariffs above 100%.

Its decision to retaliate against US levies prompted a truce level to be agreed between the pair, pending further talks.

There’s a backlash against the EU over its deal, with many national leaders accusing the European Commission of giving in too easily. A broad 15% rate is to apply, down from the threatened 30%, while the bloc has also committed to US investment and to pay for US-produced natural gas.

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Millions of EU jobs were in firing line

Where does the UK stand?

We’ve already mentioned that the UK was the first to avert the worst of what was threatened.

While a 10% baseline tariff covers the vast majority of the goods we send to the US, aerospace products are exempt.

Our steel sector has not been subjected to Trump’s 50% tariffs and has been facing down a 25% rate. The government announced on Thursday that it would not apply under the terms of a quota system.

UK car exports were on a 25% rate until the end of June when the deal agreed in May took that down to 10% under a similar quota arrangement that exempts the first 100,000 cars from a levy.

Who has not done a deal?

Canada is among the big names facing a 35% baseline tariff rate. That is up from 25% and covers all goods not subject to a US-Mexico-Canada trade agreement that involves rules of origin.

America is its biggest export market and it has long been in Trump’s sights.

Mexico, another country deeply ingrained in the US supply chain, is facing a 30% rate but has been given an extra 90 days to secure a deal.

Brazil is facing a 50% rate. For India, it’s 25%.

What are the consequences?

This is where it all gets a bit woolly – for good reasons.

The trade war is unprecedented in scale, given the global nature of modern business.

It takes time for official statistics to catch up, especially when tariff rates chop and change so much.

Any duties on exports to the United States are a threat to company sales and economic growth alike – in both the US and the rest of the world. Many carmakers, for example, have refused to offer guidance on their outlooks for revenue and profits.

Apple warned on Thursday night that US tariffs would add $1.1bn of costs in the three months to September alone.

Barriers to business are never good but the International Monetary Fund earlier this week raised its forecast for global economic growth this year from 2.8% to 3%.

Some of that increase can be explained by the deals involving major economies, including Japan, the EU and UK.

US growth figures have been skewed by the rush to beat import tariffs.

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The big risk ahead?

It’s a self-inflicted wound.

The elephant in the room is inflation. Countries imposing duties on their imports force the recipient of those goods to foot the additional bill. Do the buyers swallow it or pass it on?

The latest US data contained strong evidence that tariff charges were now making their way down the country’s supply chains, threatening to squeeze American consumers in the months ahead.

It’s why the US central bank has been refusing demands from Mr Trump to cut interest rates. You don’t slow the pace of price rises by making borrowing costs cheaper.

A prolonged period of higher inflation would not go down well with US businesses or voters. It’s why financial markets have followed a recent trend known as TACO, helping stock markets remain at record levels.

The belief is that Trump always chickens out. He may have to back down if inflation takes off.

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Trump’s tariffs are back – here’s who is in his sights this time

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'A BIG DAY FOR AMERICA!!!' - Trump's tariffs are back, and will affect dozens of countries

It is “Liberation Day” III – the third tariff deadline set by Donald Trump.

Countries without bilateral trade agreements will soon face reciprocal tariffs – ranging from 25% to 50% – with a baseline of 15% to 20% for any not making a deal.

He has delayed twice, from April to July and from July to August, but hammered this date home in his trademark caps-on style: “THE AUGUST FIRST DEADLINE STANDS STRONG, AND WILL NOT BE EXTENDED. A BIG DAY FOR AMERICA!!!”

“Will not be extended” for anyone but Mexico, it seems. The country secured a 90-day extension at the last minute, with Mr Trump citing the “complexities” of the border.

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Explained: The US-UK trade deal

By close of business on the eve of deadline, he had a handful of framework deals – some significant – including the UK (10%), the EU, Japan and South Korea (15%), Indonesia and the Philippines (19%), Vietnam (20%).

On the EU agreement, which he struck in Scotland, the president said: “It’s a very powerful deal, it’s a big deal, it’s the biggest of all the deals.”

But what happened to the “90 deals in 90 days” touted by the White House earlier this year?

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The short answer is they were replaced by letters of instruction to pay a tariff set by the US.

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How Trump 2.0 changed the world

Amid of flurry of late activity, the US played hardball with major trading partners like Canada.

“For the rest of the world, we’re going to have things done by Friday,” said US Commerce Secretary Howard Lutnick – the “rest of the world” meaning everyone but China.

There is, apparently, the “framework of a deal” between the world’s two largest economies, but talks between Washington and Beijing are continuing.

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Worker begs America for help

In terms of wins, he can claim some significant deals and point to his tariffs having generated an impressive $27bn (£20.4bn) in June, not bad for a single month.

But the legality of the approach is under siege – with the US Court of International Trade ruling that the “Liberation Day” tariffs exceeded the president’s authority, with enforcement paused pending appeal.

The deadline has stirred the pot, forcing a handful of deals onto the table. Whether they stick or survive legal scrutiny is far from settled.

But the playbook remains the same – threaten the world with trade chaos, whittle it down, celebrate the wins, and pray no one checks what’s legal.

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Microsoft is now worth over $4 trn, becoming only second firm ever to pass milestone

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Microsoft is now worth over  trn, becoming only second firm ever to pass milestone

Microsoft has become only the second publicly traded company after Nvidia to surpass $4 trn (£3.03trn) in market valuation, after registering huge earnings.

On Thursday, shares rose on Wall Street with the S&P 500 and Nasdaq climbing to new record highs.

Stocks in Microsoft jumped after posting better-than-expected results, helped by its Azure cloud computing platform, which is a centrepiece of the company’s artificial intelligence (AI) efforts.

Shares in Facebook and Instagram’s parent company, Meta, also surged after beating sales and profit targets.

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Is Trump’s AI plan a ‘tech bro’ manifesto?

Technology giants Apple and Amazon will report their results after Wall Street’s close.

Microsoft first cracked the $1trn (£760bn) mark in April 2019, but its move to $3trn (£2.27trn) took longer than technology giants Nvidia and Apple.

Nvidia tripled its value in just about a year and clinched the $4trn milestone before any other company on 9 July. Apple was last valued at $3.12trn.

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In comparison, the biggest UK company by market value is drug manufacturer AstraZeneca, worth $235.97bn (£178.55bn).

Companies ranked by market value (USD), according to tradingview.com

1. Nvidia (US) $4.43trn
2. Microsoft (US) $4trn
3. Apple (US) $3.12trn
4. Amazon (US) $2.47trn
5. Alphabet (US) $2.35trn
6. Meta (US) $1.95trn
7. Saudi Arabian Oil (Saudi Arabia) $1.56trn
8. Broadcom (US) $1.42trn
9. Berkshire Hathaway (US) $1.03trn
10. Tesla (US) $1.02trn
11. Taiwan Semiconductor Manufacturing (Taiwan) $1trn
29. Samsung Electronics (South Korea) $338.06bn
36. Alibaba (China) $284.62bn
52. AstraZeneca (UK) $235.97bn

While sweeping US tariffs had investors worried about tighter business spending, Microsoft’s strong earnings have shown that the company’s books are yet to take a hit.

Microsoft’s multibillion-dollar bet on OpenAI is proving to be a game changer, powering its Office Suite and Azure offerings with cutting-edge AI and fueling the stock to more than double its value since ChatGPT’s late-2022 debut.

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Read more from Sky News:
Microsoft beats Nvidia by market value
Trump unveils AI action plan
UK ramps up AI adoption with Meta

On Wednesday, the firm announced Azure sales surpassed $75bn (£56bn) on an annual basis, while Azure revenue jumped 39% in the April-June quarter.

Overall revenue rose 18% to $76.4bn (£57.81bn) over the same period.

It is also forecasting a record $30bn (£22.7bn) in capital spending over the first quarter to meet soaring AI demand..

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