Inheritance tax loopholes and incentives for small business owners, most often benefiting the richest people in Britain, have cost taxpayers at least £4bn a year, according to official figures.
The cost to the public purse from inheritance tax loopholes – seen as an unpopular tax on death by some, but an equitable way of redistributing wealth by others – has risen to almost £2bn.
Loopholes in the levy, which is paid by fewer than a tenth of estates and charged at 40% above the tax-free threshold of £325,000, include relief on agricultural land, business shares and transfers to charities. The cost to the taxpayer is roughly the same as the value of VAT relief on purchases of children’s clothes.
Robert Palmer, the executive director of the campaign group Tax Justice UK, said: “Many of these reliefs are simply giveaways to companies and the wealthy. ”
Entrepreneurs’ relief, labelled by the Resolution Foundation thinktank as the “worst tax break” in Britain, will cost taxpayers £2.4bn this year. First introduced by Labour under Gordon Brown a decade ago, and then expanded by the Conservatives, it had initially been planned to cost about £200m a year, but has now cost taxpayers about £20bn in total.