The Death Tax has risen again. The government estimates that its proposals for social care funding will cost the Treasury £1 billion a year. That will be met through a combination of not compensating government departments for the higher National Insurance contributions they will have to pay under the new single-tier state pension and freezing the level at which inheritance tax kicks in at £325,000 until 2019 – the source of the ‘death tax’ accusations today.
Freezing the inheritance tax threshold
The inheritance tax threshold (or ‘nil-rate band’) is the amount of an estate that is not taxed. It rose in both cash- and real-terms throughout the Labour years, but in 2009 Alistair Darling decided to freeze it at £325,000 for 2010-11. And in his final budget in March 2010, Darling decided that it should stay frozen until 2014-15.
George Osborne did not change those plans, but in his 2011 budget he said it would rise in line with CPI inflation from 2015-16 onwards.
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