Chancellor Rishi Sunak‘s next big economic policy to try and spark a post-Covid recovery has been the subject of great speculation. Mr Sunak ruled out replacing cash with “Britcoin” today, saying he wants to lay out the government’s plans for remaining at the “cutting edge of technology while also protecting access to cash.” He wrote on LinkedIn: “It’s right that we explore the potential role of central bank digital currencies (CBDC) to understand the wide-ranging opportunities and challenges they could bring.
“A CBDC would, potentially, be a new form of digital money issued by the Bank of England and for use by households and businesses. It would exist alongside cash and bank deposits.”
Some Britons may be fearing that Mr Sunak could look to tax hikes in order to raise funds, and some are suggesting that wealth taxes could be the Chancellor’s chosen route.
In April the International Monetary Fund (IMF) said: “To help meet pandemic-related financing needs, policymakers could consider a temporary Covid-19 recovery contribution, levied on high incomes or wealth.”
The IMF’s deputy director of fiscal affairs, Paolo Mauro, added that: “Governments could consider higher taxes on property, capital gains and inheritance. One specific option would be a COVID-19 recovery contribution – a surcharge on personal tax or corporate income tax.”
The Treasury currently collects £5.3billion a year from inheritance tax. Analysis from tax and advisory firm Blick Rothenberg shows that a one percent rise would raise around £130million extra a year, while a five percent increase would bring in an additional £650million.
The standard Inheritance Tax rate is 40 percent. It’s only charged on the part of your estate that’s above the threshold of £325,000.
iNews reported in May that Mr Sunak is “minded” to hike inheritance tax in order to raise billions from people’s assets.
A senior Government adviser said: “The preference is to introduce the tax hikes after winning the next election off the back of a ‘Covid victory bounce’.
“If that becomes the plan then we can expect the next General Election by the spring of 2023 at the latest, as we’ve got to start paying the bill for the pandemic in the ‘medium term’ as the Chancellor has already given the nation fair warning on.”
“Once the Government comes up with proposals, it is highly likely that they will need to find more money, and you have to raise that from somewhere. Taxation is clearly one way of doing so.
“Rather than taxing a 20-year-old on their income to pay for social care for a 90-year-old who has their own house, it might be that inheritance tax could be a source of income.
“It wouldn’t be the most popular choice, a number of people really hate inheritance tax, but on the other hand, it is about this fairness point.
“It’s about is this a way of generating money to give the elderly a dignified later life with the care that they need.”