Red Wall rebels force Downing Street to drop 'game-changer' plan
Red Wall rebels force Downing Street to drop potential ‘game-changer’ plan to axe inheritance tax
- Inheritance tax threshold is £325,000, with 40 per cent paid on anything above
- There is an extra £175,000 allowance for a main residence if passed to children
Downing Street has backed away from plans to scrap inheritance tax, after Tory MPs in the Red Wall seats argued that it would benefit too small a proportion of voters.
The idea was discussed in No 10 at the start of the summer as a potential ‘game-changer’ to overturn Labour’s 20-point lead in the opinion polls.
But it is now unlikely to form part of Chancellor Jeremy Hunt’s Autumn Statement after MPs in key battleground seats argued that the £7 billion cost would be better spent on other tax cuts.
The threshold for inheritance tax is £325,000, with 40 per cent paid on everything above that. There is an extra £175,000 allowance for a main residence if it is passed to children or grandchildren. No tax is paid on an estate left to a spouse or civil partner.
Advocates of abolition argue that even though only four per cent of British estates are liable, aspirational voters expect that theirs will be among them in the future. Around a third of people think their assets will be enough to attract inheritance tax when they die.
Plans to scrap inheritance tax are now unlikely to form part of Chancellor Jeremy Hunt ‘s Autumn Statement
Meanwhile, Rishi Sunak and his advisers are locked in discussions about his crunch address to the Tory Conference next month
When the axing plan was first reported, senior Tories hailed it as ‘throwing the gauntlet’ down to Labour and reviving their ‘low-tax’ credentials as the headline policy offer in next year’s manifesto. But many Red Wall MPs argued this was more of a cut for voters in the Blue Wall of the South than for those in their own seats in the North and Midlands.
READ MORE: Jeremy Hunt considers curbing benefit rises to free up cash for tax cuts
Jeremy Hunt is considering capping benefit rises to free up cash for tax cuts ahead of the general election
One said: ‘There are better tax cuts to be made. For voters in both the Red and Blue Walls, it would be better if we shored up support by raising the 40p [income tax] threshold to £75,000 and cutting the basic rate.’
The Conservative plan was also seized on by the Labour party, who described it as a ‘tax cut for the wealthy’ that was ‘straight out of Liz Truss’s calamity Budget’.
Polls show that the most popular tax cut is lower VAT, followed by reductions in income tax. Abolishing inheritance tax is backed by 10 per cent.
Meanwhile, Rishi Sunak and his advisers are locked in discussions about his crunch address to the Tory Conference next month, with insiders saying that it will be ‘stronger on vision than content’.
A senior source said: ‘Rishi is being urged by some to be bolder, to go on the attack more and set out eye-catching policies. Others think we need to be patient while the economy starts to turn around.’
However, those Tory MPs faced with losing their seats are not feeling patient, with claims that up to 20 letters of no confidence in the Prime Minister are circulating. Rumours of plotting are, as ever, centred on Levelling Up Secretary Michael Gove and his protege, Business Secretary Kemi Badenoch.
A source said: ‘There is definitely jostling, although no one is quite sure whether Gove wants the leadership for himself or for Kemi. Suella [Braverman, the Home Secretary] is clearly also on the park.’
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