The UK Treasury is set to receive more than £170 billion in revenue from capital gains and inheritance tax over the next six years, according to Budget documents.
However, this news has been met with criticism from those who argue that these taxes are inefficient and represent a form of double taxation on investors and entrepreneurs.
While the Chancellor, Jeremy Hunt, has not proposed any increases to these taxes, the amount collected by HM Revenue and Customs has significantly increased in recent years.
Last year alone, the Treasury collected £21.4 billion from these taxes, almost two-thirds higher than five years prior.
By 2027/28, capital gains and inheritance tax are expected to bring in £34.5 billion, marking another 61% increase.
The Office for Budget Responsibility (OBR) has forecasted that over the next six years, the taxes will generate £126.1 billion and £45 billion respectively.
Together, these taxes represent a £171.1 billion wealth tax on households, £37.3 billion higher than the OBR’s previous forecast.
Critics argue that capital gains tax is voluntary and distorts investment decisions, while inheritance tax is double taxation and encourages investment for tax minimisation rather than economic efficiency, limiting opportunities for growth.
Matthew Lesh, Director of Public Policy at the Institute of Economic Affairs, has accused the government of relentlessly squeezing wealth creators and entrepreneurs.
Meanwhile, others claim that the inheritance tax is increasingly becoming a tax on the middle classes.
Currently, estates worth up to £325,000 can be passed on without paying inheritance tax, with a 40% levy above that threshold.
The government has countered that the UK’s tax system is fair, with half of capital gains taxes paid by the wealthiest 1%.
Nonetheless, the significant increase in revenue from these taxes has raised concerns among critics about the impact on families and the potential negative effects on the economy.»UK Government Criticized for Double Taxation of Investors and Entrepreneurs«