How Jeremy Hunt's inheritance tax slash will widen wealth inequality in the UK

As Britain bursts at the seams, pulled apart by chronic underinvestment, Chancellor Jeremy Hunt's priority is making sure those who come from money get to keep even more of it.

In the upcoming autumn budget, Jermey Hunt is considering tax-cuts for the wealthiest and alienating people claiming benefits. This comes at a time when the wealth inequality gap in the UK is at an all time high. According to the Office for National Statistics, in 2020, the richest 10% of households in the UK held 43% of all wealth, and by contrast, the poorest 50% of households owned 9%. When looking at wealth inequality on a global scale, in 2021, the top 0.01% owned a staggering 11% of all wealth. Despite the public purse having significantly less than £25 billion headroom, which was precedent before 2010, the Chancellor has found £6.5 billion to spare in the budget. Political pressure is mounting on the Tories as they fall behind Labour in the polls - set to lose by a landslide at the next election. In a plea to win back their core voters, they will inevitably want to cut taxes where possible, and inheritance tax seems to be the frontrunner. The fact that Jeremy Hunt is considering this fiscal policy - using £6.5 billion to widen wealth inequality - once again exposes the Tories’ commitment to keeping the rich, rich.

In the UK, inheritance tax is paid by less than 4% of all estates, meaning that a cut would only benefit the richest in society. With the current threshold, it is already possible to receive up to £1 million tax-free. In 2017, thinktank Resolution Foundation, published a report that exposed the reality of inheritances and who actually benefits. The report disclosed that inheritances don’t actually go to people who need it, for example young people trying to get on the property ladder. 83% of millennials who have bought their homes, also have parents who bought their homes, meaning that the majority of people who will inherit a property, already own one.

Therefore, cutting inheritance tax would benefit those who are already in a financially sound position. The top 5% of estate death inheritors would receive an additional £180,000. This comes at a time when the United Nations’ special rapporteur on extreme poverty and human rights has stated that Universal Credit payments in the UK were ‘grossly insufficient’ and violating international law. And so, it is immoral that the Tories want to perpetuate wealth at the top, when more than a fifth of the population are at risk of poverty, despite the UK having the sixth-largest national economy.

In the UK, we are experiencing private rents increasing at the fastest rate on record, rising numbers of evictions, and well over one million households waiting for social housing. 104,510 households are sleeping in temporary accommodation, which is a 10% increase since last year, and 62.1% of these households include dependent children, meaning that 131,370 children are living in unstable, unsuitable conditions. In 2022, the Joseph Rowntree Foundation found that 3.8 million people were experiencing destitution - unable to afford basic needs such as food, shelter, and warmth - which included 1 million children. Whilst simultaneously, Jeremy Hunt, who is also a private landlord, has increased his tenants’ rent by a staggering 18%, amid a national housing crisis. What is worrying is that the government is not suggesting any solutions that will stimulate social mobility and help children move beyond poverty in the future. A senior researcher at the Institute for Fiscal Studies has claimed that “it may be harder now than at any point in over half a century to move up if you are born in a position of disadvantage.” Without real distribution of wealth, generations of families are going to be trapped in vicious cycles of poverty - experiencing inadequate housing and education - whilst inheritance is yet to peak.

This government is implausibly out of touch. 14 million people are  living in poverty, four million children are living in poverty, and two thirds of these children are living in households where at least one parent is at work. How can you morally consider giving away a tax-break to the wealthiest 4% when the country is facing multiple crises - housing crisis, a crippling NHS, climate crisis, and poverty. The undeniable point about inheritance tax is that for the person receiving the payment, it has not been earned, it has been given, in most cases, as a birthright. 

We need a progressive approach to wealth redistribution and a focus on fixing public services that are still feeling the impact of a decade of austerity. We need a completely new economic model, policies that focus on a fairer taxation system, such as a one-off wealth tax, and increasing top rate income tax and capital gains. The Wealth tax Commission reported that if the government introduced a 5% wealth tax on all individual wealth above £500,000, then it could raise up to £260 billion. We need to address growing inequality with proper investment and policies that acknowledge generational wealth - not perpetuate growth at the top.