A clutch of the wealthiest families in the UK are taking advantage of inheritance tax rules designed to help small businesses and landowners, saving themselves almost £700m a year, according to a report.
The campaigning group Tax Justice UK found 234 families with more than £1m in business assets shared £458m in relief in the 2015-16 year thanks to inheritance tax breaks.
This represented almost 80% of the total business tax relief given in that financial tax year.
The report also found 261 families owning more than £1m in agricultural property shared £208m in tax relief in 2015-16, 62% of the total relief given out that year. Similar amounts of tax relief were claimed in each of the previous two tax years, according to the report, the findings of which are based on freedom of information requests to HM Revenue and Customs (HMRC).
The report, How Inheritance Tax Breaks Favour The Well-Off, found the wealthiest families received the biggest breaks. The 51 families registered with HMRC as having business property worth more than £5m shared an approximate tax saving of £327m. This works out to an average saving of £6.4m per estate. And 62 families registered as owning agricultural property valued at more than £2.5m shared a £107m tax savings pot – an average of £1.7m per estate.
Robert Palmer, the executive director of Tax Justice UK, said: “Wealth inequality is at staggeringly high levels and this report shows how it is in part underpinned by inheritance tax relief. There is no justification for politicians allowing costly tax breaks to continue to operate in this way.”
In January, an analysis of figures by HMRC revealed the cost to taxpayers of all inheritance tax loopholes has risen to almost £2bn annually. The levy is paid by fewer than one in 10 estates and charged at 40% above the tax-free threshold of £325,000, but exclusions include relief on agricultural land, business shares and transfers to charities.
In 2011, 60% of agricultural land was purchased by farmers. By 2017, farmers accounted for 40% of purchases, as investors flocked to buy agricultural land and property.
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