Inheritance Tax

Lord Wood of Anfield Excerpts

Wednesday 20th May 2020 Lords Chamber

[Baroness Penn]

My Lords, the Government thank the Office of Tax Simplification for the work it has done; they are looking at the results of its two reports very carefully. I reassure the noble Lord that since 2011, inheritance tax and trusts have been brought into the disclosure of tax avoidance schemes—DOTAS—regime, which means that any new and innovative inheritance tax avoidance scheme involving transfers into trust must be disclosed to HMRC, and gives the Government powers to take any enforcement actions necessary.

[Lord Wood of Anfield (Lab)]

My Lords, as the noble Lord, Lord Palmer, said, the very wealthiest are just not paying their share of inheritance tax. In 2016, estates worth £2 million to £3 million paid only 20% rather than the 40% required. Estates worth over £10 million paid on average just 10%. With Exchequer revenue to be at a premium in the years ahead, will the Government urgently examine the closure of the myriad loopholes available to the very wealthiest; for example, through the extensive use of transfers to trust?

[Baroness Penn]

My Lords, I point out that in 2018-19, inheritance tax receipts were at a record high, and 70% of inheritance tax comes from estates valued at £1 million or more. I believe that the noble Lord is referring to certain exemptions that come under agricultural and business property. While we recognise that there are some concerns, the policy intention behind those exemptions is to allow family farms and businesses to be passed on without having to be broken up to pay inheritance tax. We think that that is an important aim.