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Debunking the inheritance tax myth

By Prospect   March 2010

It is an oft-repeated myth that taxes on inheritance were originally introduced (in 1894) to affect primarily the very rich, but that they now hit even modest fortunes. In fact, far fewer estates now pay the tax than half a century ago. The original, 1894 threshold, was just £100, which remained unchanged until 1946. By 1939, 153,000 paid the tax—against only about 36,000 in 2009, despite the population having risen by a quarter in that time. The tax now produces around 2 per cent of all direct tax, against 15 per cent in 1939. In that year, three quarters of…

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