Former Chancellor Sir Sajid Javid has called for the abolition of inheritance tax, arguing it would help the UK economy grow. In a new report by the think tank Policy Exchange, Javid said Britain's complex tax system has become 'a brake on growth' with the burden on taxpayers at 'a seventy year high'. The report also recommends scrapping National Insurance and the 45% additional rate of income tax paid by the highest earners.
Javid: Tax System Rewards Talent and Ambition
Writing in the report's foreword, Sir Sajid stated: 'Sustained improvements in our growth, built upon over a generation, will deliver greater improvements to our country’s finances and standards of living than any one budget ever could. Fundamentally, I believe that this is a country where talent, effort and ambition should always be rewarded. Our tax system is currently acting as a brake on that - it’s time it got out of the way.' He added: 'The most damaging examples of this do harm that is far out of proportion with the revenue they raise. Fix that, and we will begin to fix the economy.'
Inheritance Tax Drives Wealth Abroad
The study, authored by economist Roger Bootle, warned that inheritance tax is particularly harmful because it encourages the wealthiest to live in countries where there is no tax on estates. The report also highlighted the damage caused by Stamp Duty Land Tax, describing it as 'one of the worst' taxes. 'It reduces liquidity in the housing market which diminishes labour mobility. It also deters downsizing, which causes people to occupy larger properties than they would otherwise do, thereby exacerbating the housing crisis,' the report said.
High Earners Face Cliff-Edge Tax Rates
Top earners in the UK face a 'cliff-edge' once incomes reach £100,000, with an effective tax rate of 62% for those earning between £100,000 and £125,140, rising to 71% if they are also repaying student loans. While the top rate of income tax is nominally 45%, in practice it is higher because the personal allowance starts to fall. High-earners also lose entitlement to childcare subsidies, which means they can ultimately find themselves worse off than people on lower incomes. This leads some workers to reduce their hours or turn down promotions to lower their incomes.
UK Tax Burden Exceeds OECD Average
Overall, Britain’s tax-take rose to 36% of GDP in 2025/26, compared to an OECD average of 34%. According to the study, this helps explain the UK’s poor economic performance. Policy Exchange said the UK should model itself on the world’s fastest-growing economies such as the United States, Australia and Switzerland, where tax takes are lower than average. Reductions in the tax burden should be funded through cuts in public spending, particularly on welfare and international aid, the report said.
Complexity Costs Businesses Billions
The report also highlighted the huge complexity of the current system, which means HMRC spends £6.6 billion each year simply to collect taxes, while the average smaller firm spends £4,500 on paperwork to ensure it is obeying all the rules.
