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Conservatives ‘consider scrapping inheritance tax to win over voters’

todayAugust 12, 2023 3

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Conservatives ‘consider scrapping inheritance tax to win over voters’

Senior Conservatives are said to be discussing abolishing inheritance tax – at an annual cost of £7billion to the Treasury – in a bid to win over voters ahead of the next election.

Downing Street is in talks about whether to scrap the levy in an attempt to shore up votes in so-called “blue wall” seats ahead of a general election in 2025.

Supporters say it could be a “gamechanger” in the south of England, where the Tories fear losing seats to opposition parties, according to The Times.

The discussions are being held just days before three Conservative by-elections take place on Thursday.

The votes could see Rishi Sunak become the first prime minister since Harold Wilson in 1968 to concede three seats at by-elections on the same day.

As the party trails Labour in official polls, axing inheritance tax could be considered a manifesto pledge rather than a policy to be implemented next year.

A source told the newspaper: “It’s about being an aspirational country.

“You work hard, play hard and pass on your wealth. It’s a live discussion.”

Read more:
Everything you need to know about by-election battlegrounds

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‘Will this cost you at ballot box?’

What is inheritance tax?

Inheritance tax is a charge on the estate – including property, money and possessions – of a person who has died.

People with an estate worth less than £325,000 usually do not have to pay inheritance tax, however, the value should still be reported.

Anyone with an estate above that value is liable to pay a standard 40% tax on the amount over the £325,000 threshold.

However, if you give away your home to your children or grandchildren, the threshold can rise to £500,000.

Two people co-habiting with joint home ownership could only have inheritance tax liability when one person dies and the value of the property exceeds £650,000.

A spouse or civil partner can pass on up to £1m including their home without any inheritance tax liability.

The average house price is £285,000, according to the latest official figures.

But abolishing inheritance tax could cost the Treasury up to £7bn a year as the nation continues to battle a cost of living crisis and inflation remains high.

A Treasury spokesperson said the vast majority of estates do not pay inheritance tax, with more than 93% of estates forecast to have zero inheritance tax liability in the coming years.

However, they added: “The tax raises more than £7bn a year to help fund public services millions of us rely on daily.”

Talks about inheritance tax come days after the government pledged to give millions of public sector workers including teachers and doctors a 6% pay rise.

Read more:
Millions of public sector workers get pay rise
‘On me personally’ if inflation isn’t halved, says PM

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‘Pay rise not funded by borrowing’

The pay increase will not be funded by borrowing, Chancellor Jeremy Hunt has insisted.

A Downing Street source said of the inheritance tax claims: “The PM has repeatedly said that he wants to cut taxes for people.

“As Conservatives that is obvious, we want people to keep more of their own money.

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“But the current economic situation means that the government is completely focused on halving inflation – to help people have more in their pockets at the end of each month.

“This kind of future-scoping speculation just isn’t on the PM’s mind at the moment and requires a different kind of economic environment to the one we are operating in.”

Written by: Newsroom

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