Rishi Sunak and Jeremy Hunt 'plan to cut' inheritance tax rate at Autumn Statement
Jeremy Hunt will deliver the Autumn Statement next week
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Prime Minister Rishi Sunak and Chancellor Jeremy Hunt have reportedly drawn up plans to cut the inheritance tax rate at the Autumn Statement next week.
The final decision on whether to cut inheritance tax, and by how much, will take place next week, according to reports.
The standard inheritance tax rate is currently 40 per cent, which applies on parts of an estate above the £325,000 threshold.
Treasury officials have concluded the move would not be inflationary, meaning it would pass the test set by Mr Hunt for tax cuts this autumn, according to The Telegraph.
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Laura Suter, head of personal finance at AJ Bell, commented: “It wouldn’t be a fiscal update without numerous rumours and leaks in the week ahead – and this year’s Autumn Statement is no different.
"Fresh off the back of clinching its inflation reduction target, it appears thoughts have immediately turned to how the government could cut taxes next week."
Economists at JP Morgan have estimated HM Treasury could have as much as £10billion to spend on tax cuts.
Ms Suter said: "The rumour mill is already in full flow of how that money could be spent. But any move by the government to hand money back to the public needs to avoid starting the inflation engine up once again.
"A decision to cut inheritance tax meets this criteria as it would offer a good incentive for people to save money in their estate, rather than spend it."
The most recent statistics from HMRC show less than four per cent of estates paid inheritance tax in 2020/21.
The personal finance expert said any headline rate cut would benefit larger estates "enormously".
A headline rate cut from 40 per cent to 35 per cent would save an estate worth £1.5million a total of £25,000 in tax, according to AJ Bell calculations.
An estate worth £10million would save £467,000.
If the rate was cut to 20 per cent, it would net an estate worth £1.5million a tax saving of £100,000.
It would mean a tax saving of £1.87million for estates worth £10million.
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Rishi Sunak is reportedly planning to cut the inheritance tax rate
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Ms Suter said: “The Treasury is already on track to have a record-busting year when it comes to IHT receipts."
The Treasury collected almost £4billion in inheritance tax revenues in the first half of the tax year, an increase of £400million compared to the same time last year. According to Ms Suter, it means it’s on track to beat the previous annual record of £7billion.
"To put those figures in context, more IHT has been paid in just six months than was paid in the entire year a decade earlier," she said.
"This itself has given the government a bit of wiggle room to cut the tax or tinker with the thresholds, as rising asset prices and inflation have helped to fuel receipts in recent years.”
GB News has contacted HM Treasury asking for comment.