The UK Government faces pressure to abolish inheritance tax (IHT) due to concerns it hampers investment and drives entrepreneurs abroad. A report from the Institute of Economic Affairs (IEA) reveals that nearly half of OECD countries do not impose taxes on bequests to adult children, positioning the UK as a high-tax outlier. The IHT, set at 40% on estates exceeding £325,000, is described as a “distortionary” burden on the economy. “A nation serious about growth and about giving families the freedom to build something lasting, would not levy a 40% charge on wealth that has already been taxed,” Lord Frost, director general of the IEA, said. “A government looking to boost growth, support families and simplify the tax system for fairness and economic competitiveness should consider abolishing inheritance tax.” Rory Meakin, who authored the report, added: “Inheritance tax is arbitrary, complex, distortionary and drives away the entrepreneurs Britain needs.”
