Trump wants To Scrap Death Tax For The Wealthiest Americans

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Donald Trump says America is the most taxed nation on earth, but it’s just not true – plenty of other countries are vying for the title.

Take his plan to scrap inheritance tax as part of his self-proclaimed crusade to reform taxes.

To a family in Britain, France or Spain, that sounds a marvellous idea.

But the devil is in the detail.

In the USA, inheritance tax is paid on an estate worth £4.2 million – more than four times the nil tax band in Britain.

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Tax no ordinary people pay

That means only the richest Americans pay inheritance tax – which skims 40% off the value of any estate worth more than £4.3 million. That adds up to just 0.2% of the population or around 6 million estates a year.

So, what do other countries pay?

Many nations have already scrapped or abandoned inheritance taxes.

Taking an estate of £1.5 million left to one child, someone in the US, Sweden, Australia or Sweden pays nothing. Nor does the estate of anyone passing away in the Gulf States – Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain or Oman.

India has no death tax, but the government is currently paddling against the flow and considering instigating inheritance taxes.

Death taxes around the world

In the UK, the tax would depend on if the £1.5 million included the family home. If not, assuming a couple passed their nil rate bands to each other, any amount over £650,000 would be subject to 40% tax, while if the home was included, the nil-rate threshold rises to £1 million by 2020.

A German family would pay tax at between 4% and 15%.

France and Spain also have fiendishly complicated probate laws and tax rates like those in the UK.

A separate survey says inheritance taxes are so complicated that one in four Brits over 50 have no idea if their beneficiaries would have to pay and, if so, how much.

Half of the over 50s did not know the IHT tax rate was 40% and a fifth (22%) did not know ISAs were subject to the tax but cash held in a pension was not.

Phasing in the main home nil-rate band over several years makes the calculation more complex, says the report published on financial web site Moneyfacts.

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