Regulation  

Tories plan IHT pension tax raid ahead of election

Tories plan IHT pension tax raid ahead of election

The Conservative Party has pledged to scrap inheritance tax on homes worth up to £1m should they win next month’s election.

The party manifesto was leaked over the weekend, with plans then confirmed by leader David Cameron yesterday (12 April).

Crucially, the move will be funded by a reduction in pension tax relief for additional rate taxpayers who earn £150,000 or more.

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Currently everyone has a personal inheritance tax allowance of £325,000 or a combined allowance of £650,000 between spouses, with 40 per cent tax applying to the value of property above this.

The Tory plan would create an extra tax-free band worth £175,000, or £350,000 between couples, applying to main residences, bringing the total nil-rate band available on a property to £1m.

Plans detail that the change would come into force in April 2017.

In a video on the party’s website, Mr Cameron stated that they would like to go further in the future. “I believe in people being able to pass things down through the generations and onto our children, it builds a stronger society.

“Inheritance tax should only really be paid by the rich, it shouldn’t be paid by those people who have worked hard and saved and brought a family house. The ambition is still there, I would like to go further; it’s something we’ll have to address in our election manifesto.”

On BBC One’s Andrew Marr Show, deputy Labour leader Harriet Harman contrasted the idea with her party’s ‘mansion tax’.

“It’s becoming clearer and clearer as we get to the election how actually the Tories are helping few people; and we want everybody to be better off,” she commented.

Meanwhile, Ukip leader Nigel Farage told the BBC that they would scrap inheritance tax completely, with details of how it would be financed to be unveiled in the party’s manifesto on Thursday (16 April).

Furthermore, according to the Guardian, Labour leader Ed Miliband is portraying Labour as the party of fiscal responsibility when he guarantees that every policy will be fully funded and will involve no extra borrowing.

Mr Miliband will use the launch of the party’s manifesto to unveil a “budget responsibility lock” to guarantee the deficit will be cut in every year.

Speaking at the launch of the Labour general election manifesto in Manchester on Monday, Mr Miliband will say: “The very start of our manifesto is different to previous elections. It does not do what most manifestos do. It isn’t a shopping list of spending policies.

“It does something different: its very first page sets out a vow to protect our nation’s finances; a clear commitment that every policy in this manifesto is paid for without a single penny of extra borrowing.”

In other election news, according to the BBC the Liberal Democrats are launching a “five point plan”, aimed at consumers and commuters, with proposals such as to end above-inflation rail fare rises and force energy firms to allow customers to change supplier within 24 hours.