Tories pledge to ease burden of inheritance tax

Michael Howard is to pledge to middle class Britain that he would relieve hundreds of thousands of families of the burden of inheritance tax if the Conservatives come to power in the next election.

The Tory leader intends to attack inheritance tax by arguing "the economic and moral case for tax cuts" for a charge that kicks at 40 per cent once inherited assets reach £263,000.

His idea is to raise the threshold to £1m will be launched alongside a number of tax-cutting "targets," that seek to cut stamp duty for homebuyers while slashing direct tax such as fuel duty.

The Shadow Chancellor, Oliver Letwin, said the mission statement of the Conservatives contains firm tax targets- instead of promises, which will stop "ordinary families" over Britain being hit by a charge meant only for the "very rich."

"Inheritance tax has become plain unfair," said Mr Letwin.

"Two and a half million houses with six million people living in them are potentially liable to inheritance tax and the number is rising rapidly."

"Even former council houses are being drawn into the net. This is a problem that needs to be remedied."

The proposal from the Conservatives to decide on the million-pound threshold and the limit for stamp duty follows a battle in the shadow Cabinet about the extent of such 'tax targets.'

Some ministers such as Liam Fox, co-chairman of the Conservatives, argued for more sweeping reform involving an overhaul of the tax system.

Lord Satchi, the other party chairman, suggested the idea of raising a tax fee threshold for income tax.

Shadow cabinet ministers have also been pushing for stamp duty thresholds to be raised, as like inheritance tax, are barriers that have not fluctuated in line with rising house prices.

Tory figures show the number of UK towns where average house prices exceed the inheritance tax threshold has risen from just one to 86, since Labour came to power.

As house prices have also risen steadily since 1997, the inheritance tax barrier has risen by just 22 per cent.

No new thresholds have been confirmed by the Tories, but they are understood to be testing the economics behind a new level of £1m.

Observers say the decision to act on tax has been expected for some time, given research over the summer that revealed voters did not think Conservatives would cut taxes, even if they pledge to do so.

Last year, the total tax sum collected by inheritance tax was £2.504bn on a total tax take if £155.5bn. Receipts from stamp duty are estimated at £7.45bn.

One Tory frontbencher said: "The aim is to show we wish to bring down the tax burden. But the polling shows we have to be careful how we explain the case. Michael has been influenced by polling evidence."

The plans are to be announced at the Conservative annual conference in the autumn.

Critics of the tax plans are expected to argue there is no actual pledge to raise the level at which tax should be set.

In addition, Labour could suggest that while such families will be caught by the tax, they will have already benefited from the rising price of their property.

 

27th September 2004

Related News

Latest News

                             

NEWSLETTER SIGN UP