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Inheritance tax should be scrapped and completely replaced, a major think tank warns today.

The Resolution Foundation says death duty is the "least fair tax" of any in the country.

Here's why.

Currently inheritance tax is charged on someone's entire estate after they die.

Their descendants must fork out 40% of the entire value of the estate over a certain threshold, currently £850,000 for couples including property.

But in a new report today, the Resolution Foundation says just 4% of estates are currently subject to it.

(Image: PA)

Meanwhile the very richest, with legal advisors, can get away with paying less than they could by using a maze of loopholes.

Those include handing wealth to children more than seven years before death and tying it up in business and agricultural land, which carry special relief rates.

What's worse, people only tend to get their inheritance at an average age of 61 - after it would've been useful to buy a house or raise kids.

So the think tank has come up with a completely different idea.

It says the tax burden should be removed from the giver - and put on the receiver instead.

(Image: Getty)

According to the Foundation, people should be taxed on all the wealth they receive over their lifetime.

They would have a £125,000 tax-free allowance, followed by a 20p rate up to £500,000, and 30p after that.

This 'Lifetime Receipts Tax' would mean there was no advantage to passing on wealth long before death or after it, the think tank says.

And it would make more people pay, but they'd be paying less each.

The Resolution Foundation claims the idea would raise £11billion in 2020/21, compared to £6billion under the current system.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, claimed: "This new system would be fairer to families, harder to avoid and would ensure our tax system keeps up with 21st Century Britain."

What do you think? Leave a comment below.