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Winning the case for progressive taxation on inheritance

The left needs to understand popular opposition to inheritance tax in order to effectively reframe the debate, argues Dominic Davies

6 to 7 minute read

A row of tractors, some sporting Union Jack flags, photographed from the pavement in Whitehall

When Rachel Reeves proposed to end the exemption of agricultural property from inheritance tax (IHT) in her first autumn budget, it ignited a small revolution. Hundreds of tractors descended on Westminster in protest, while thousands of others blocked roads across the country. They carried signs that railed against ‘Starmer the farmer harmer’, notably interrupting one of the Prime Minister’s speeches by blaring horns to the tune of Darude’s Sandstorm.

Reeves’s aim in ending the exemption was to close a loophole used by the very wealthy to avoid paying tax on property inheritance, not drive small farmers out of business. A chaotic communications strategy and lack of any larger vision however meant the move was quickly subsumed into a story of government overreach. Dubbed the ‘tractor tax’, it became a rallying point for a Barbour-clad Nigel Farage, who joined the farmers’ protests and pledged to abolish the tax altogether.

Now approaching her second autumn budget, and with a self-imposed £50 billion spending gap to address, Reeves is looking to close further IHT loopholes. Though technically a progressive step, she has again failed to frame these policies as a way to take back control of the country’s privatised infrastructure and restore faith in its weakened public services.

This failure is utterly disastrous on two counts. It reinforces the interpretation of taxation as an infringement on personal liberty and further widens the goal for a Farage-led Reform Party. Once again, the left has to set itself apart from this calamitous Labour government and challenge the idea that our only choice is between zombie centrism and the hard right.

Public outrage

The country desperately needs to redistribute wealth across Britain’s razor-sharp inequalities. A progressive IHT is one fair and efficient way to achieve that goal. At present, it kicks in at just 40 per cent on estates worth over £325,000, and only the wealth above that threshold is taxed.

Currently, IHT tax is paid on fewer than five per cent of UK estates. In the 2024-25 tax year, it raised just £7.5 billion from the £100 billion of wealth that is inherited annually. It is a definitively ‘progressive’ form of taxation and opposition to it is wildly irrational for most people.

And yet, Farage’s proposal to abolish IHT is not only in step with the longstanding opinion of the British public, but is gaining favour. Polls repeatedly show majorities favour IHT cuts, including among Labour voters, and the farmers’ protests have intensified this conviction. As research by Demos shows, the public rarely associates IHT with improvement to public services and instead widely views it as an overstep by a bloated state apparatus.

The only social space left after the evisceration of society and the undermining of the individual is the family, and family advantage has historically been passed on through inheritance

This strength of feeling at first seems counterintuitive. As Lewis Goodall pointed out on LBC in August 2025: ‘we have created an economy that relentlessly taxes earned income while leaving vast sums of unearned wealth largely untouched.’

This fact runs counter to the foundational Thatcherite narrative that British society is basically meritocratic, rewarding hard work. In that context, we might expect clear majorities in favour of policies that target passive wealth and ease the burden on working people. Yet Goodall’s proposal of a 100 per cent IHT was met with an outrage that swelled far beyond the usual rightwing backlash.

This is a strength of feeling that Britain’s new left bloc – a Corbyn and Sultana-led party, Polanski’s eco-populist Greens – will have to think seriously about. A key demand of this new coalition must be meaningful wealth redistribution, which can only be achieved by investment in public services and infrastructure funded by progressive taxation. It is therefore imperative to understand why people are drawn to views that appear to counteract their material interests.

Precarity versus security

For Eliza Filby, Britain has become an ‘inheritocracy’ where inheritance (or the lack of it) now determines life opportunities. Thatcher’s mass privatisations siphoned public wealth into the pockets of Boomers, primarily through housing stock. Those assets now being transferred to the next generation begins to explain why taxation on inheritance is perceived as a ‘threat’ by a vocal and politically overrepresented middle class.

But it does not explain why so many who are currently untouched by IHT are in favour of its all-out abolition. To understand this, we have to grasp the historic shift initiated by Thatcherism and now reaching its culmination: the collapse of Britain’s postwar social contract and its promise of ever-improving life chances for successive generations.

In the UK today, dwindling public services have exacerbated mistrust – even hatred – of the government, which daily confirms this suspicion by retracting welfare support and rolling out carceral measures. The more the country’s privatised infrastructure crumbles, the more people lose faith in the state and feel the need to look out for themselves and their families.

Such precarity leads to inheritance being seen as one of the few ways people can provide security for their children and grandchildren, even when they themselves don’t have meaningful wealth to pass on. This context frames IHT not as a means to rebuild a broken society, but as the final grasp of a state seemingly determined to eat up the little hope for the future that people have left.

This situation is at once a product of decades of neoliberalism and the moment at which that dispensation is finally surpassed. If Thatcher’s claim that ‘there’s no such thing as society’ is now reproduced through the infrastructures of everyday life, the other great neoliberal myth – that the free market means more meritocracy – has been left in the dust.

This vicious combination leaves a world where on the one hand we are all individuals, while on the other our individual merit is worth very little. The only social space left after the evisceration of society and the undermining of the individual is the family, and family advantage has historically been passed on through inheritance.

Building a different consensus

The dilemma for the left to grasp is that failing public infrastructure does not automatically produce a citizenry eager to elect a high tax-and-spend government. Indeed, the more the basics of life – housing, health, education – become unattainable, the more people want to hold onto their private assets, even if in reality it is only the very richest whose wealth is ‘protected’ by regressive taxation. 

This isn’t some free-floating ideology, but a sense reinforced everyday through people’s immediate experience. They see it in their own lives, where friends who can buy a house are those with inherited wealth. They see it in the state itself, where a decade of austerity immediately followed by a high tax burden on earned income since 2019 has decoupled the historical association of tax rises with improved public services.

Finding ways to reverse this spiral is an urgent task. New left party leaders needs to insist, repeatedly, that the cause of Britain’s stagnating economic growth is not ‘lazy’ workers or the lack of private investment from overseas, but an unproductive landlord class that has accumulated huge sums of wealth by buying up essential assets and then hiking up the rent.

If there is a material opening here, it is that increasingly even the most generous inheritances fall short of the crazy sums of money needed for housing deposits or a debt-free university education. The left needs to identify and connect these disenfranchised groups into a counter-hegemonic programme rooted in unions and other local organisations that have proven to their members that buying into a collective project can still be of benefit, to both them and their families.

Dominic Davies is Senior Lecturer in English at City, University of London and author of The Broken Promise of Infrastructure (Lawrence & Wishart, 2023)

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