Last Updated on: 24th September 2023, 04:15 pm
Inheritance Tax Reduction Plans Generate Mixed Reactions Among Conservative MPs
Amidst reports of impending inheritance tax cuts, Conservative Members of Parliament (MPs) find themselves split over the proposed changes, raising concerns about their impact on perceptions of intergenerational fairness.
Rishi Sunak’s Inheritance Tax Cut Proposal
Chancellor Rishi Sunak is reportedly gearing up to unveil a substantial reduction in inheritance tax rates, with eventual plans to completely eliminate the tax, as disclosed by sources cited in the Sunday Times. This significant policy shift comes as Sunak seeks to redefine his leadership agenda, following his reconsideration of commitments tied to the net-zero carbon emissions agenda, including the 2030 ban on petrol and diesel cars.
Prime Minister’s Vision for Taxation
Prime Minister Boris Johnson aims to position these potential tax changes as an “aspirational” offering to voters, strategically timed for the upcoming general election and preceding the Conservative Party conference slated for next week.
Mixed Reactions Among Conservative MPs
Despite public opinion polls indicating that a majority of the electorate, including Tory supporters, perceive the current inheritance tax as unfair, Conservative MPs exhibit a diverse range of opinions on the matter. One Conservative MP expressed reservations about the proposed move, asserting, “This is not a good idea.”
They elaborated, “Our party is already unfairly perceived as favoring the wealthy, and reducing inheritance tax, which is paid by fewer than four percent of the population, may exacerbate that perception. While it’s an unpopular tax and deserves reform, there are other areas that should take priority at this time.”
Alternative Tax Priorities
Former Minister for Leveling Up and Treasury, Simon Clarke, shared his perspective via Twitter, stating, “When it comes to choosing our priorities for tax cuts, income tax should take precedence over inheritance tax every time. Only 3.8 percent of UK estates pay inheritance tax, while the majority of working individuals pay income tax.”
He emphasized, “I understand the resentment towards inheritance tax, but in a period marked by profound issues of intergenerational unfairness, particularly in the realm of housing, we should prioritize efforts to alleviate the burden on those who earn their income.”
Supporters of the Proposal
Nevertheless, some MPs welcomed the proposed plan, with a senior Conservative member describing it as “a very positive step,” while a backbencher remarked, “I sincerely hope the rumors about reducing inheritance tax are true. Inheritance tax is widely unpopular, and a reduction would be well-received.”
Current Inheritance Tax Regulations
Under the existing regulations, estates valued at over £325,000 are subject to a 40 percent inheritance tax, with an additional £175,000 allowance applicable to a primary residence when passed on to children or grandchildren. Married couples can combine their allowances, allowing parents to bequeath up to £1 million to their descendants without incurring tax liability.