Rishi Sunak’s tax on wealth… by stealth: Government is set to rake in £90bn through inheritance and capital gains levies in blow for middle classes, documents show
- The amount families will pay in inheritance and capital gains tax is set to soar
- Treasury is set to collect taxes worth 35 per cent of national income in 2025
- Rishi Sunak is freezing inheritance tax threshold and capital gains tax allowance
Wealth taxes will cost households nearly £90billion over the next five years in a huge windfall for the Treasury.
The amount families will pay in inheritance and capital gains tax is set to soar as the Government pummels the middle classes, Budget documents show.
As well as raising extra money through income tax and corporation tax, the Chancellor is freezing the inheritance tax threshold and capital gains tax allowance.
Wealth taxes will cost households nearly £90billion over the next five years in a huge windfall for the Treasury. Chancellor Rishi Sunak is seen above on Budget day last week
These stealth taxes spell misery for millions of Britons who have invested their hard-earned savings in property, shares and other assets.
It comes as the total tax burden on families is at its highest in more than 50 years.
Figures buried in the documents show the Treasury will collect taxes worth 35 per cent of national income in 2025 – the most since the late 1960s.
Sam Collins, policy adviser at the Institute of Economic Affairs think-tank, said: ‘Instead of increasing the tax burden on businesses and individuals, the Chancellor should go for growth and take radical steps to simplify our tax code – leaving more money in the hands of individuals, families and businesses.’
Figures from the Office for Budget Responsibility (OBR) show that the Treasury earned £14.9billion from capital gains and inheritance tax in 2019-20. But by 2026 it will make £21billion – a rise of 41 per cent.
The figures also show the taxman’s takings from capital gains tax will rise from £9.8billion last year to £14.4billion by 2026 – a rise of 47 per cent. The levy is paid on profits made when an asset such as a holiday home or shares is sold
Critics argue that inheritance tax is increasingly becoming a levy on the middle classes.
Estates worth up to £325,000 can be passed on without paying inheritance tax – or £500,000 if you are passing on your home to children or grandchildren.
There is a levy of 40 per cent above that threshold. For married couples the threshold is £650,000, or £1million if it includes the home.
OBR figures show the tax raised £5.1billion last year. But this is expected to hit £6.6billion by 2026 – up 29 per cent.
The figures also show the taxman’s takings from capital gains tax will rise from £9.8billion last year to £14.4billion by 2026 – a rise of 47 per cent.
The levy is paid on profits made when an asset such as a holiday home or shares is sold. Higher-rate taxpayers pay 28 per cent on gains made on residential property and 20 per cent on other assets.
Basic-rate taxpayers pay 18 per cent and 10 per cent.
Mr Collins said: ‘Wealth taxes lead to economic distortion, harming businesses and individuals.
‘The Chancellor argues that investment is key to our economic recovery, but capital gains tax has the reverse effect. At high levels, it discourages investment, deters entrepreneurship and encourages tax avoidance.
‘Inheritance tax is known as Britain’s most hated tax for a reason. It is not only immoral as a form of double taxation but is a bureaucratic nightmare for families.’