Introducing an 100 percent inheritance tax may seem at face value a radical way to redistribute wealth ensuring rich families have to share their assets with others.
But experts have told Express.co.uk such a policy would be grossly unfair and difficult to administer.
Fiona Dodd, private client partner at Mayo Wynne Baxter, said: “The risks of introducing 100 per cent inheritance tax include spawning even more of a tax avoidance industry than already exists in the UK.
“Those wealthy enough to take advice would probably be able to get around it, so it will simply and sadly hit those who can’t afford to pay for advice.
“It will be counterproductive if there are no exemptions, for example if it breaks up businesses and other wealth generating ventures to pay the tax.”
She also warned such a policy would discourage investment and would cause huge heartache for Britons.
Ms Dodd said: “It would result in incredibly cruel emotional trauma for anyone who needed to get rid of family possessions to pay the tax, while encouraging people to hide their wealth.
“Another risk is families would pass on their money too early, which could then be lost in divorce.
“Additionally, it would make vulnerable people more likely to suffer financial abuse, which would be disguised as tax planning.
“The only benefits are that it could be viewed as egalitarian and it might invigorate the property market as people may have to sell to pay the tax.”
She also said an 100 percent levy could encourage economic activity as people will spend more and pass on money to their relatives, but as no one knows when they will die, it would be hard to get the timing right.
The expert also warned there would need to be some form of provision to pay for a person’s care in case they gave everything away to avoid the tax.
She said the policy would in fact be more likely to discourage economic activity as people would not be incentivised to accrue wealth to pass on to their family.
She warned such a change could cause a glut of assets for sales leading to a depression in prices and a further hit to the economy.
Ms Dodd said: “It’s important to note that 100 percent inheritance tax would also prevent the poor from holding onto their wealth and passing it on to their family to help them.
“Yes there would be equality but only in terms of the misery it generates. However, the rich would be likely to find a way around it, thus rendering any system even more unequal.
“Forcing each generation to start again does not promote long-term thinking in terms of caring for land or businesses.
“Instead, it incentivises get rich quick, short term riskier strategies as there is no incentive to leave your children any kind of legacy.”
Elisabeth Squires, wills and probate solicitor at Britton & Time, spoke about the potential benefits of the policy.
She said: “A common argument when the subject is mentioned, is that it will encourage people to work harder as they cannot depend on their inheritance to provide for them.
“Knowing that the only way to increase one’s wealth is to earn it by working would increase productivity in the workplace as people compete more with one another to receive a substantial payout.
“With this rule in motion, it is highly likely that our class system would then begin to dissipate and equalise as the rich and the upper class would then have to earn their share instead of inheriting it from their families or other close companions.”
She said the tax revenue boost would also provide more funds for infrastructure such as schools, hospitals and leisure facilities.
But she warned those who depend on their inheritance could be plunged into poverty if the taxman took all a person’s estate upon death.
Ms Squires added: “Moreover, the risk of poverty among the elderly may also increase as people potentially “miscalculate” their spending within their lifetime.
“With a chance that economic activity may increase, people are less likely to save their earnings, spending their income without having to worry about the younger generations or those who would have inherited.
“When the time comes to retire, there may be a chance that elderly people realise that they have not prepared for their retirement and do not have enough funds to live on.”
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