Chancellor Jeremy Hunt shelves plans to slash inheritance tax
Chancellor Jeremy Hunt shelves plans to slash inheritance tax in his Autumn Statement amid fears of a Red Wall backlash if the ‘death tax’ is cut for the wealthy
- There are fears inheritance tax cut could lead to a backlash in the Red Wall seats
Jeremy Hunt has shelved plans to slash inheritance tax in the Autumn Statement.
The Chancellor had been considering whether to halve the 40 per cent rate of the hated duty – also known as ‘the death tax’.
But government sources said the idea had been abandoned amid concerns it could be weaponised by Labour as a handout to the rich during a cost of living crisis.
There were fears that this in turn could lead to a backlash in the Red Wall seats the Tories won in 2019.
However, it is understood the proposal will be looked at again in the run-up to the Spring Budget.
The Chancellor had been considering whether to halve the 40 per cent rate of the hated duty – also known as ‘the death tax’
The levy has been called the most hated tax in Britain, even though only 4 per cent of people are subject to it.
But thanks to rising house prices and a greater desire to transfer wealth between generations, more people are being dragged into its orbit.
Economic forecasters at the Institute for Fiscal Studies say that up 12 per cent could be paying it within a decade.
The levy is charged at 40 per cent for estates worth more than £325,000, with an extra £175,000 allowance towards a main residence if it is passed to children or grandchildren.
Couples can combine their allowance, allowing transfers of up to £1 million tax-free.
Abolishing inheritance tax would cost about £7 billion a year, but cutting income tax by 2p in the pound would cost £13.7 billion a year.
In an exclusive poll for the Daily Mail at the weekend, most respondents (41 per cent) said they wanted reductions in income tax as they believe this is the most ‘unfairly applied’ levy.
But it was followed closely by inheritance tax, which 36 per cent want scrapped.
In his Saturday column for the Mail, former PM Boris Johnson became the most high-profile Tory to throw his weight behind slashing inheritance tax.
The levy has been called the most hated tax in Britain, even though only 4 per cent of people are subject to it (Stock Image)
He said it was long ‘overdue’ because younger people didn’t have it as easy as the so-called ‘baby boomer’ generation.
He wrote: ‘We baby boomers had the full-fat pensions; we had the free university; we had the cheap housing.
‘Those benefits allowed us to accumulate phenomenal wealth, as a generation, and in the name of intergenerational fairness it is right that more of that wealth should now be passed on to our descendants.
‘Yes, we should cut taxes on income, and effort, and enterprise. But it’s now right to cut inheritance tax as well.’
The Treasury took £3.9 billion from the death duty in the first half of the financial year alone, £400 million higher than in the same period last year.
In a sign that Labour would have weaponised a cut in the levy, Shadow Chancellor Rachel Reeves told Sky News yesterday that she would not support such a move. But she refused to say whether Labour would reverse any cut to inheritance tax if it won power.
‘I think I’ve been very clear, this is not a priority. It is not something that I would be doing,’ Ms Reeves said, adding that any spare money for tax cuts should instead be used to cut personal taxation.
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