Tories consider scrapping inheritance tax to win votes

 No 10 has 'live' discussions about abolishing inheritance tax next year

Source - Daily Telegraph 15/07/23

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Inheritance tax could be scrapped under Conservative plans at the next election as part of an effort to defend blue wall seats in the South of England.

There are “live” discussions in No 10 about abolishing the levy next year, The Times reported.

It had been thought that the Conservatives would cut income tax instead, but the move to abolish the inheritance levy would be cheaper, at a cost to the Treasury of around £7 billion a year rather than £13.7 billion.

It comes as the Tories identified 32 “true blue” seats that they said must be fought by Thatcherite candidates at the next election, to avoid an “existential crisis” for the party.

Neither Downing Street nor the Treasury denied that “live” discussions were taking place over inheritance tax when approached by The Telegraph on Friday night.

A government source said that “cutting inflation is very much the priority right now” but refused to comment on pledges that would be made ahead of the next election.

A No 10 source told The Telegraph: “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.

“But the current economic situation means that 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 his mind at the moment and requires a different kind of economic environment to the one we are operating in.”

It comes amid increasing calls for the death tax to be scrapped.

Last week, a think tank co-founded by Margaret Thatcher joined more than 50 Conservative MPs who have called for it to be abolished.

The levy is “tortuously complicated”, unfair and economically damaging, the Centre for Policy Studies said.

Former chancellor George Osborne, who pledged in 2007 to raise the nil-rate band to £1 million, said earlier this month that the threshold should be uprated with inflation.

Under current rules, inheritance tax is charged at 40 per cent on wealth over a £325,000 threshold, the “nil rate band”, which has been frozen since 2009 and will remain so until 2028.

There is an additional £175,000 allowance towards a person’s main residence if it is passed to children or grandchildren. Spouses can also share their allowances.

The taxman collected £7.1bn in death duties last year.