Grant Thornton calls for IHT overhaul

Research by the financial and business advisers argued that far fewer people are liable to pay IHT than is commonly thought.

A survey of 400 homeowners with properties valued at over £250,000 found a high level of confusion about who pays the tax.

A total of 62 per cent believed they are liable when in fact, just 3 per cent of UK estates were subject to IHT in 2010 to 2011 according to HMRC.

The firm is calling for a full review of UK IHT to either scrap the current system, or make significant changes to it make it simpler and fairer for future generations.

Francesca Lagerberg, head of tax for Grant Thornton, said: “The results of our poll show that people are confused about the current IHT system and as a result there is a real feeling of dissatisfaction. What started off in 1986 as a straightforward system has become a complex maze of traps for the unwary and therefore people resent it.”

She added the research also found that 86 per cent of the people surveyed supported introducing an exemption for the main residence.

And 41 per cent backed calls to replacing IHT with ‘green taxes’.

The least popular alternative to the current system was a form of annual tax on wealth, mirroring the income tax regime. A toal of 65 per cent did not support this option.

Ms Lagerberg added: “One thing is clear from our survey and that is the antipathy felt towards a tax on the home. If IHT is to be retained in some form, serious consideration should be given to introducing a main residence exemption.

“We would welcome a full review of the system by the government and the Office of Tax Simplification.”