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Tories Promise To Slash Inheritance Tax

The Conservatives have said they will take family homes out of inheritance tax by introducing a new allowance which effectively increases the threshold for tax to £1m.

David Cameron said that if his party wins the 7 May election, parents will be offered a new £175,000 allowance to enable them to pass property on to children tax-free after they die.

For properties worth more than £2m, the allowance will be gradually tapered away so that those worth more than £2.35m do not benefit.

Inheritance tax is currently payable at a rate of 40% on the value of an estate above the £325,000 threshold – or £650,000 if a couple takes advantage of the existing allowance.

It is thought around 22,000 families will benefit from the move by 2020 and Mr Cameron said the costs would be paid for by a £1bn raid on pension tax relief for people earning more than £150,000.

Mr Cameron will say today: “We will take the family home out of inheritance tax.

“That home that you have worked and saved for belongs to you and your family.

“You should be able to pass it on to your children. And with the Conservatives, the taxman will not get his hands on it.”

Conservatives promised a £1m inheritance tax threshold in the 2010 election, but were blocked by Liberal Democrats from implementing it when in coalition.

Labour Treasury spokesman Chris Leslie said the move was a “panicky promise from the Tories”.

He added: “The Tories made a promise on inheritance tax before the last election and they broke it.

“At a time when our NHS is in crisis and most working people are paying more under the Tories, it cannot be a priority to spend £1bn on a policy which the Treasury says would not apply to 90% of estates.

“The Tories would choose to give a £140,000 tax cut for a house worth £2m while they have increased VAT on families and pensioners.”

Meanwhile, Labour has revealed its plans to crackdown on tax-dodgers if it wins the election, hoping to cut avoidance and evasion by at least £7.5bn a year by the middle of the next Parliament.

Shadow chancellor Ed Balls said it would take a Labour government to “call time” on the Tories’ “lax approach”, adding that Labour would set targets for HMRC to reduce tax avoidance by at least £7.5bn a year.

He said: “We will close the loopholes the Tories won’t act on, increase transparency, toughen up penalties and abolish the non-dom rules.

“And our first Budget will make sure that, following an immediate review of HMRC, it has all the powers and resources it needs to come down hard on tax avoidance and evasion.”

Conservative Treasury minister David Gauke said: “Ed Miliband and Ed Balls turned a blind eye to aggressive tax avoiding and evading for 13 years when they were in charge – they were the tax avoiders’ friends.”

The Lib Dems have also set out tax plans, promising “light at the end of the tunnel” with moves to eliminate Britain’s deficit by 2017/18.

Nick Clegg said his plan has “a heart as well as a brain”, trying to drive home his claim that his party will cut less than the Conservatives and borrow less than Labour.

Spelling out plans for a consolidation totaling £27bn by 2017/18, made up of £12bn in additional tax, £12bn in public spending reductions and £3bn in welfare cuts, Mr Clegg will challenge the other parties to spell out in similar detail how they would balance the nation’s books.

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