Increased inheritance tax in Scotland would harm Scottish homeowners, says Apropos by DJ Alexander

Apropos by DJ Alexander has said that proposed changes to Inheritance Tax (IHT) in the Institute for Public Policy Research (IPPR) paper Thinking bigger on tax in Scotland would be a further nail in the coffin for Scottish homeowners.

David Alexander

David Alexander, joint managing director of Apropos by DJ Alexander, said: “As most people’s largest asset is their home the proposal to set the IHT threshold at £36,000 would impact upon everyone who owns a property in Scotland. The IPPR proposal is to charge either a flat rate of 10% on all estates valued at £36,000 and above bringing in £200m to national or local government or to use the UK IHT system set at a 20% marginal rate-raising £300m a year. Either way the homeowner pays. Given that Scotland already taxes everyone earning above £26,993 a year at a higher rate, and charges substantially more through land and buildings transaction tax (LBTT) to buy a house than the rest of the UK this policy would further alienate Scots already living here and anyone inclined to move to Scotland for work or leisure.”

He added: “It would be a tax on savings, on striving, on trying to improve your life. Everyone who wants to own a bigger property in a nicer area is effectively being told ‘don’t bother, we will punish you for aspiration’. By taxing at such a low level, in such a punitive way, this report effectively targets ambition and will be a further disincentive to anyone thinking of relocating to Scotland and would increase the already widening tax gap between this country and the rest of the UK.”

Mr Alexander also said: “Why would anyone invest here when 50 miles away the tax regime will be so much more benign and welcoming? Instead of creating policies which, superficially, increase revenue local and national governments would be better served in developing an attractive, fair and welcoming tax regime. Increasing tax levels does not automatically increase revenue. There is a cut off level where the increased charges become counter-productive and generate lower revenues. It is clear that this proposal, which I would hope is rejected by the Scottish government, would be that step too far in maintaining Scotland as a welcoming and attractive place to live, to invest, and to work.”

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