Current inheritance tax at 40%... No change for 14 years
Plan to gradually abolish after lowering inheritance tax
The UK government is preparing a plan to gradually abolish inheritance tax. UK Prime Minister Rishi Sunak has described inheritance tax as the "most detested tax."
On the 23rd (local time), The Times reported, "One of the public policies to be announced at the Conservative Party conference as early as next month will include a proposal to reduce inheritance tax."
Currently, in the UK, if an asset exceeding ?325,000 (approximately 530 million KRW) is inherited, the heir is taxed 40% on the excess amount as inheritance tax.
This threshold has not changed for the past 14 years. Due to inflation, the number of people subject to the tax is gradually increasing. Last year, the government's inheritance tax revenue reached a record high of ?7.1 billion (approximately 11.61 trillion KRW).
However, according to the UK Treasury, only 3.76% of the population is subject to inheritance tax. There are also opinions that the likelihood of paying inheritance tax is overestimated.
The Times reported, "Prime Minister Sunak will announce a plan to first reduce the 40% tax rate and then gradually abolish it over several years." Other policies expected to be included are a ?1 billion urban infrastructure investment plan, university admissions reforms, and smoke-free policies in open spaces.
The push to abolish inheritance tax is seen as a kind of election pledge ahead of the UK's early general election in 2025. The Conservative Party led by Sunak is currently trailing with a 28% approval rating compared to the opposition Labour Party's 42% as of this month.
Inheritance and inheritance tax have historically been controversial in many countries. Some argue that strict enforcement is necessary to prevent the transfer of wealth, while others believe that excessively high inheritance taxes should be reduced or abolished.
The average top inheritance tax rate among OECD countries is about 25%. South Korea has a top rate of 50%, the second highest after Japan's 55%. Other rates include France at 45%, the UK and the US at 40%, and Germany at 30%. However, in Germany, the tax is divided into three categories depending on the relationship between the deceased and the heir, and the top rate of 30% applies only when children or spouses inherit.
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