Jeremy Hunt will not cut inheritance tax in his November mini budget despite Tory calls to reduce or scrap it
- Conservative strategists are discussing what to do about the tax before election
Jeremy Hunt will not cut inheritance tax in his November mini budget, despite a growing Tory clamour for the move.
Conservative strategists are discussing whether to cut – or even abolish – the hated tax in the run-up to next year’s election.
But Whitehall sources said there had been ‘no discussions’ about including the measure in the Chancellor’s autumn statement, which is scheduled to take place on November 22.
‘The focus is still on cutting inflation for now,’ a source said. ‘The Chancellor said last week it would be virtually impossible to cut taxes this year and that remains the case.’
Rishi Sunak yesterday declined to comment on reports that he is considering a major intervention on inheritance tax.
Chancellor Jeremy Hunt will not cut inheritance tax in his November mini budget, despite a growing Tory clamour for the move
Speaking during a visit to a community centre in Broxbourne, Hertfordshire, the Prime Minister said: ‘The most important tax cut I can deliver for the British people is to halve inflation.
‘It is inflation that is putting up prices of things, inflation that is eating into people’s savings and making them feel poorer. And the quicker we get inflation down, the better for everybody.’
Inheritance tax is levied at 40 per cent after death and raises more than £7 billion a year. Although most estates fall below the starting threshold, which can be up to £1 million, surveys show it is widely despised.
Former business secretary Jacob Rees-Mogg yesterday became the latest senior Tory to back radical action on the issue, saying inheritance tax should be ‘extinguished’.
At the weekend, defence secretary Grant Shapps said the ‘punitive’ tax was ‘deeply unfair’.
Downing Street played down ‘speculation’ about the plan yesterday, but Mr Sunak’s top team is said to be warming to the idea of scrapping the tax.
One senior Tory said: ‘There is an argument that when we don’t have much money to play with, it might be more effective to scrap a tax completely rather than just shave off a penny or two off income tax.
‘You would also set up a clear dividing line with Labour. They could never support abolishing inheritance tax, so we would go into an election with them promising to bring back a death tax we were going to abolish.’
However, a report by the centre-left think tank Demos today argues that the tax is not as unpopular as commonly thought.
The Demos study, which polled 2,000 people and carried out focus groups with more than 100 voters, found widespread agreement that abolishing inheritance tax ‘could cause unacceptable trade-offs’.
Participants repeatedly described the tax as a ‘necessary evil’ that raised money for the Treasury, and feared getting rid of it would mean either other taxes would have to increase or spending on public services would have to be cut.