Passing on


Over the past 18 months, research for the Intergenerational Commission has illustrated how the assumption that each generation will do better than the one before it is under pressure. This paper is one of a series that moves beyond the diagnosis of these problems to consider what action is needed to address generational living standards challenges. In this paper, our focus is inheritance taxation. With inheritances growing rapidly in importance at the same time as fiscal pressures, inheritance taxation must play its role in raising revenue in a fair way. But the current Inheritance Tax system manages to raise relatively little while also being especially unpopular. It is seen as unfair for three main reasons: taxing giving is seen as a bad thing, as is the tax’s explicit link to death; it has a high rate; and it is seen as easy for the richest to avoid due to its wide range of exemptions. This paper proposes a Lifetime Receipts Tax that would address these problems while also encouraging individuals to spread their wealth wider and raising revenue to help fix Britain’s intergenerational contract.

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