If inheritance tax can’t be scrapped let’s change it for the better

I’d happily jump on the Telegraph bandwagon for the abolition of inheritance tax, even in the company of Liz Truss and Nigel Farage. The urge to provide a cushion of capital for children and grandchildren is an honourable one. Recipients of already-taxed cash from deceased relatives are arguably less likely to be burdens on the state in their own later lives, just as the state is unlikely to spend the same money, if confiscated, in efficient ways for the greater good. And to argue against inheritance is to put socialist hostility to wealth ahead of the worthy aim of family betterment. Enough said.

The trouble with this campaign, however, is that it’s also a call for a £7 billion tax cut for the better-off, which simply isn’t going to happen. Certainly not ahead of the next general election; perhaps only in some imaginary golden future of fiscal surplus and Tory swagger. I don’t even hold out hope for an uplift in the £325,000 IHT threshold that was frozen in 2010 and should be £450,000 by now to keep up with inflation but will stay where it is, by Jeremy Hunt’s decree, until 2028; as will the additional £175,000 ‘residence nil-rate band’ for homes bequeathed to direct descendants.

But still there’s room for creative thinking. Why not, for example, use IHT to address the issue of future burdens on the state more directly, by creating an additional nil-rate band for capital passed into descendants’ pension pots – to remain there untouched until retirement age? If that device became a catalyst for a new habit of pension-building among the young who currently save nothing, could anyone object?