IFS suggests raising of inheritance tax

by Sarah Ashcroft

As pressure grows on chancellor George Osborne to scrap the 50p tax rate, one expert has proposed alternative means of taxing rich individuals.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), explained that the current tax rate is encouraging people to go in search of tax avoidance schemes.

As a result, he believes an increase in inheritance tax could be a worthy alternative, which may influence people's plans when it comes to making a will.

"Wealth inequality has grown very strongly over the past few years, so if you are worried about it, inheritance tax is relatively useful," he told the Daily Telegraph.

The IFS pointed out that it is essential for the tax system to be as effective as possible, as the government uses it to take around £4 out of every £10 earned in the economy.

Inheritance tax is currently payable on estates valued at more than £325,000 and stands at a rate of 40 per cent.

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Published on: September 22, 2011

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