Their unfair nature has been exacerbated now that frozen thresholds are dragging more families into paying them. These families will be less able to seek professional advice on inheritance tax and the huge complexities it adds to our tax code.
In contrast to this disgraceful death tax, the second action the Treasury could take was once described by the Adam Smith Institute as “the best idea in politics you’ve never heard of”: full spending.
Simply put, this means that businesses can deduct the full cost of any investment in qualifying plant or machinery immediately. When he announced the temporary full spending policy in March 2023, the Chancellor removed one of the biggest barriers to purchasing new technology or equipment.
Previously, companies that purchased equity shares did not recover the full cost in full: money invested today would not be worth the same in ten years. This pro-growth change means we now have some of the most competitive business investment taxes in OECD countries.
However, this policy is scheduled to expire in 2026. As I remember well from my time in business, companies do not look at investments in isolation. Instead, they view it in cycles that last for many years, if not decades.
They are more likely to respond to a permanent tax break, knowing that they can build on these investments, and that they are able to repair their machines.
The Chancellor has rightly pointed out on numerous occasions that companies need certainty. Making the full expenditure permanent is a simple way to give businesses the confidence they need to invest in the UK.