How Inheritance Tax (IHT) Could be Made Fairer for All

We came across this article in The Telegraph; it draws attention to the contentious issue of inheritance tax (IHT) and the upcoming general election. David Cameron and the Conservative Party have been discussing increasing the IHT tax-free threshold from £650,000 for a married couple to a staggering £1 million, and there have even been discussions regarding abandoning the tax completely.

Jumping into such a policy could land the party in hot water as they are often criticised of favouring and aiding the rich and wealthy of this country – and increasing the threshold could generate a lot of this sort of criticism.

One of the measures discussed in the article for helping ordinary families to avoid getting trapped by IHT is to place a cap on the value of a family home (£750,000 is suggested) and making it exempt from IHT. By also reducing the tax-free threshold for other assets it could help save average families from potentially crippling IHT.

These two possible amendments to IHT policies could make it a much fairer system, and one that taxes wealth "in a more strict sense", the article notes. These changes will make the system fairer as it will stop the act of taxing individuals based on where they choose to live and work, but rather look at their individual circumstances more closely.

IHT tends to affect those whose only asset is their home the most, and such changes would adequately address this injustice. Although IHT doesn't garner much for the exchequer (around £4 billion this tax year), this amount is expected to increase dramatically in the next four years due to increasing house prices.

Do you think introducing such changes will help how people view IHT? Do you think it would make a fairer system?