“…The comprehensive taxation of lifetime gifts on the donor would mark a return to the capital transfer tax that operated from 1974 to 1986: see furtherTiley (2007).41 These proposals included the abolition of the nil rate band on lifetime gifts, and abolition of almost all reliefs other than the spouse exemption and charitable exemption.42 ATED could relatively easily be converted into a progressive replacement for council tax, simply by removing the restriction to properties owned via companies and relief for rented properties.43 This is especially true under current economic conditions, where both the inflation rate and normal rate of return are low. See further Appendix B, which compares the three approaches in application to a simple example.44 For further discussion of the politics of taxing wealth, seePerrett (2020) andClark et al (2020).…”
This is particularly significant for assets that qualify for 100% business property relief for IHT, as well as CGT forgiveness on death. See further OTS (2019). 8 Over this period there have also been several changes to the scope of the tax base (e.g. in relation to capital allowances). 9 There are a few exceptions on transfers to foreign domiciled spouses not discussed here. 10 These criteria are drawn widely: for example, business property relief applies to shares in private trading companies invested on the Alternative Investment Market (AIM), even where the deceased had no involvement in the management of the business. 11 Those whose major asset is their home cannot effectively give this away if they need to continue living in it, because this would breach anti-avoidance provisions known as the 'reservation of benefit' rules, backed up by the pre-owned assets tax (POAT) rules.
“…The comprehensive taxation of lifetime gifts on the donor would mark a return to the capital transfer tax that operated from 1974 to 1986: see furtherTiley (2007).41 These proposals included the abolition of the nil rate band on lifetime gifts, and abolition of almost all reliefs other than the spouse exemption and charitable exemption.42 ATED could relatively easily be converted into a progressive replacement for council tax, simply by removing the restriction to properties owned via companies and relief for rented properties.43 This is especially true under current economic conditions, where both the inflation rate and normal rate of return are low. See further Appendix B, which compares the three approaches in application to a simple example.44 For further discussion of the politics of taxing wealth, seePerrett (2020) andClark et al (2020).…”
This is particularly significant for assets that qualify for 100% business property relief for IHT, as well as CGT forgiveness on death. See further OTS (2019). 8 Over this period there have also been several changes to the scope of the tax base (e.g. in relation to capital allowances). 9 There are a few exceptions on transfers to foreign domiciled spouses not discussed here. 10 These criteria are drawn widely: for example, business property relief applies to shares in private trading companies invested on the Alternative Investment Market (AIM), even where the deceased had no involvement in the management of the business. 11 Those whose major asset is their home cannot effectively give this away if they need to continue living in it, because this would breach anti-avoidance provisions known as the 'reservation of benefit' rules, backed up by the pre-owned assets tax (POAT) rules.
This paper examines some drivers behind substantial changes in tax policy in recent decades. Using existing theories and our definition of ‘beneficial major tax reforms’, we discuss three case studies: the US in the 1980s, the UK in the 1980s, and the UK’s failed ‘mini-budget’ of 2022. Our analysis reveals that the US’s TRA86 has, to some degree, improved efficiency, while the UK reforms may have exacerbated inequality with ambiguous effects on efficiency. Finally, we outline the potential for future reforms and conclude that political conditions are more likely to instigate major change than economic motivations.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.