Between April and June 2024, UK inheritance tax receipts reached £2.1 billion, a rise of £83 million over the same period the previous year. However, according to research from a reputable think tank, the UK could generate more money from inheritance tax if they introduce reforms based on strategies used by other countries. This blog asks, ‘ Should the UK learn from other countries about inheritance tax?’
Recent Inheritance Tax Reports
The cross-party Demos organisation issued the Future of Inheritance Tax report, which revealed that the 3.7% of UK deaths in 2020–2021 that resulted in inheritance tax fees were far less than the percentages for countries like South Korea (6.4%) and Japan (9.3%). Of the G7 members, the UK only raised more than Italy, where the ordinary rate is 3%, and Canada, which has given up on gift and inheritance taxes. According to the analysis, the UK would have raised £680 million more in revenue in 2019–20 if it had taxed inheritance and gifts at the same rate as France rather than the £5.1 billion collected.
Important Variations Amongst Nations
There are some significant variations in inheritance tax laws from country to country. Some countries do not even have inheritance tax laws; some impose taxes on the estate, and others only on the inheritance received. The tax levy % varies greatly. While some nations have flat rates, others have progressive rates dependent on the size of the estate or legacy.
Regarding allowances and exemptions, significant differences exist in how much you can inherit or gift tax-free. Preference is frequently shown to spouses, kids, and charitable organisations. Your citizenship and place of residence may also impact your tax liability, particularly if you have assets in multiple countries.
Inheritance Tax System Examples
United States – Many states have their own inheritance or estate taxes and the federal estate tax.
Canada – Although several provinces in Canada have their own estate taxes, the country does not have a federal inheritance tax.
Australia – There are neither state nor federal inheritance taxes.
Asia – Asia’s inheritance tax regulations differ greatly from one Asian country to the next. While some have entirely done away with inheritance and estate taxes, others have intricate systems with different rates and exclusions.
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