Rishi Sunak suggests he would slash inheritance tax rate as Prime Minister

The former Chancellor was on the campaign trail in Cardiff when he was asked if he would scrap the levy, at a hustings event. He said that scrapping the tax entirely was off the table but he hinted he may reduce the tax rate.

He said: “I’m someone who believes in supporting aspiration.

“I think that is a Conservative value that many of us in this room will hold dear and inheritance tax is a way to do that.

“So, over time, is that something that we should look at? Of course we should, because people who are working hard should be rewarded for that.

“If they want to build something and leave that for their family, that’s an entirely Conservative instinct and a Government that I’m privileged to lead would very much want to support that instinct.

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“That’s what a Conservative prime minister should do.”

There have been previous calls to slash the unpopular tax.

Phil Hall, Head of Public Affairs and Public Policy at accounting group AAT, said: “AAT has long recommended that the headline rate of IHT be reduced from 40 percent to 20 percent.

“By halving the very high headline rate, incentives for avoidance or evasion will be removed.

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Married couples and civil partners have some leeway, as they can pass assets between each other free of IHT, and inherit each other’s allowances.

Unfortunately unmarried couples who cannot do this, even if they have lived together for years or decades.

When a spouse or civil partner dies, their partner can inherit their £325,000 nil-rate threshold, along with a £175,000 main residence allowance.

The allowance applies where people are passing on their main home to direct descendants such as children and grandchildren.

This adds up to a potential £500,000 IHT allowance, allowing married couples and civil partners to pass on a potential £1million of wealth to close family.

People also have the option to gift their property away if they move out, avoiding the tax as long as they live for another seven years.

Gifts given in the three years before death are taxed at the full 40 percent.

Anything given three to seven years before the death is then taxed on a sliding scale known as taper relief.

The rate drops every two years, with the rate of tax dropping to 32 percent, 24 percent, 16 percent and eight percent.