UK Government Considers 2-Year Extension of 520 Million Won Inheritance Tax Threshold 'De Facto Tax Increase'

Jeremy Hunt UK Chancellor of the Exchequer [Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Jeremy Hunt, the UK Chancellor of the Exchequer, is reportedly considering extending the inheritance tax threshold of ?325,000 (approximately 519.38 million KRW) for two more years until the 2027-2028 fiscal year to increase government revenue, Bloomberg reported on the 7th (local time).

The ?325,000 inheritance tax threshold has been in effect since 2009 and is currently set to apply until the 2025-2026 fiscal year.

Chancellor Hunt intends to maintain the inheritance tax threshold for an additional two years, expecting to raise at least ?500 million more in taxes. Due to inflation, even if the inheritance tax threshold is frozen, taxes naturally increase, effectively resulting in a tax hike.

The UK Treasury has already decided to freeze the income tax and capital gains tax thresholds until 2025-2026.

A Treasury official stated that the freeze period for income tax and capital gains tax thresholds could also be extended further.

The official added that Chancellor Hunt has not yet decided whether to reduce the corporate tax rate gap between banks and general companies.

Currently, banks in the UK pay corporate tax rates 8 percentage points higher than general companies. While the corporate tax rate for general companies is 19%, banks are taxed at 27%.

Chancellor Hunt is considering reducing the 8 percentage point gap to 3 percentage points.

The corporate tax rate for general companies in the UK will increase to 25% starting next April. If Chancellor Hunt decides to reduce the corporate tax rate gap, banks will face a 28% corporate tax rate from next April, which is 1 percentage point higher than now. If the gap is maintained, the bank corporate tax rate will rise to 33%.

Chancellor Hunt is scheduled to unveil the budget containing the medium-term fiscal plan on the 17th.

The UK daily newspaper The Guardian reported that Hunt will announce a ?60 billion austerity plan including at least ?35 billion in government spending cuts. Other foreign media outlets have reported the austerity scale to be around ?54 billion.

This content was produced with the assistance of AI translation services.