SNP calls for devolution of inheritance tax to Holyrood

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Chancellor Philip Hammond is facing calls transfer control over inheritance tax to Holyrood to enable Scottish politicians to crack down on tax avoidance and evasion.

SNP Treasury spokeswoman Alison Thewliss yesterday described inheritance tax as “not fit for purpose” pointing to wealthy individuals, who are exploiting loopholes to avoid paying the full amount.

SNP Treasury spokeswoman Alison Thewliss yesterday described inheritance tax as 'not fit for purpose'. Picture: John Devlin/TSPL

SNP Treasury spokeswoman Alison Thewliss yesterday described inheritance tax as 'not fit for purpose'. Picture: John Devlin/TSPL

Ms Thewliss’s plea came amid growing signs that more people are avoiding or evading paying the tax imposed on the estates of deceased people when they are passed on to loved ones.

The tax, which is under Westminster control, is payable at a rate of 40 per cent on the value of an estate above £325,000 or £650,000 for someone who is married or widowed.

Despite the most recent figures showing that HMRC collected a record £5.1 billion from inheritance tax in the year up to May 2017, there is evidence that the Treasury is not receiving the amount it is entitled to.

HMRC figures show that the inheritance tax gap between the amount expected and the amount received has grown to £600 million in 2016/17.

That figure represents a 50 per cent from £400 million five years ago in 2012/13.

Ms Thewliss said: “The current system of inheritance is not fit for purpose with loopholes allowing the wealthiest individuals to avoid paying their fair share.

“With Westminster having repeatedly failed Scotland on this issue, it is high time inheritance was devolved so that the Scottish Government could deliver a system designed to meet Scotland’s needs. In the meantime, the SNP will continue to lead the fight against tax avoidance at Westminster.”

Loopholes include individuals buying shares in the Alternative Investment Market (Aim) which gives access to a tax break called business property relief and reduces the inheritance tax bill.

Ms Thewliss’s proposal was last night rejected by the Conservatives, who said the post Scottish referendum Smith Commission had decided that control over inheritance tax should remain under Westminster control.

Conservative constitution spokesman Adam Tomkins said: I don’t think there is any appetite in Scotland for this to be reopened. The principal reason for being against devolving inheritance tax is that there are real issues about avoidance. The more complicated you make it, the more opportunities you open up for avoidance. Devolving it makes it more complicated.”