Inheritance tax increase 'on horizon' as expert warns: 'I'm fearful'

Chancellor Rishi Sunak is facing mounting pressure from those in his own party to not raise taxes in order to pay for the coronavirus pandemic and the potential impact of a no deal Brexit. Trade talks with the EU remain deadlocked with the transition period – and deadline for a deal – at midnight on December 31. Whitehall departments have devised resilience deals to aid the agriculture, fishing, automotive and chemicals industries, all of which could face tariffs and disruption if free trade between the UK and EU ends.

Sources involved in the plans told the Telegraph that this could cost as much as £10billion, but Conservative MPs are trying to warn the Chancellor against tax rises.

Tory MP John Redwood said: “Of course not tax rises, that would actually probably reduce revenue. I think tax cuts would increase revenue, which would be a good idea.”

Mr Sunak gave a bleak assessment of the UK economy, saying: “I can tell you it’s a very difficult picture. The economy is experiencing significant stress. There’s more stress to come.”

As a result of the economic disruption, financial advisers are now warning wealth tax increases could be around the corner, leading to hikes in inheritance duties.

It came after the Wealth Tax Commission suggested that a one-off five percent levy on assets, including main homes, could raise £260billion for the economy.

Rachael Griffin, tax and financial planning expert at Quilter, the investment management company, told the Financial Times that it is possible but unlikely that this plan could be implemented.

She said: “What this report may do is soften the path for tax increases in the existing system.

“Were the Chancellor inclined to raise more revenue from existing taxes on capital, such as capital gains tax and inheritance tax, he now has some political cover, since he can point to the alternative being a £260bn raid on personal wealth.”

READ MORE:Inheritance tax warning as many in UK struck by ‘hefty tax bills’ 

Richard Murphy of Tax Research UK warned against tax increases in an interview with Express.co.uk earlier this year.

He said: “At first, Rishi Sunak completely underestimated what was going to happen, it was a complete disaster, because he hadn’t realised how disastrous coronavirus was going to be.