Rishi Sunak is seriously considering scrapping inheritance tax ahead of the general election. Photo: JAMES MANNING/AFP
Downing Street is facing a backlash over its consideration of scrapping inheritance tax, as Tory MPs called for a focus on cutting income tax instead.
And Jonathan Gallis, the Conservative MP for Stoke-on-Trent North, and Neil O'Brien, the former health secretary, tweeted on Wednesday calling for income tax cuts.
The intervention comes after The Telegraph reported that the spring Budget is seriously considering scrapping inheritance tax as pre-election gift giveaways are planned.
The reaction from some Tory politicians illustrates the debate taking place within the Conservative Party. on which tax cuts should be prioritized before voters go to the polls.
The same debate is playing out within the Top 10 itself, with both the economic impact and potential political momentum being factors in the discussions.
Prioritize income tax cuts
Reducing the 20 percent basic income tax rate and raising the threshold at which people start paying the higher 40 percent income tax band are also being considered No. 10.
Final decisions are unlikely to be made until March, when the budget is expected – potentially the last major financial event before the general election.
Mr Gallis tweeted: “We should abolish inheritance tax, but not now. Tax cuts in spring 2024. I would prefer that we prioritize: raising the threshold for a higher income tax rate; Reduce the basic income tax rate; Reverse IR35 reforms; Increase the VAT registration threshold to £250,000.”
Mr O'Brien wrote that “what people want most is a reduction in the taxes that fall on people on low and middle incomes and municipal tax and VAT.”
He included an Ipsos Mori opinion poll chart from June showing voters would prefer cuts to income tax, council tax, VAT, fuel tax and national insurance over inheritance tax.
People most want to reduce taxes that fall on low and middle income people, as well as council tax and VAThttps://t.co/s6MPOMILgx pic.twitter.com/JqeVQONXdy< /p>— Neil O'Brien MP (@NeilDotObrien) December 27, 2023
Mr O'Brien also reposted a comment from another Twitter user who said he was “surprised” that Downing Street is still considering scrapping inheritance tax. Meanwhile, Damian Green, who leads the One Nation group of moderate Tory MPs, has called for help getting new buyers onto the property ladder to be a priority in budget.
Mr Green told The Telegraph of the interest. on scrapping inheritance tax: “I would make helping people become home owners the absolute top priority, whatever money the Chancellor has.”
The comments reflect only one side of the tax debate within the Tory party. Conservative MPs Ranil Jayawardena and David Jones have already welcomed the potential cut to inheritance tax.
Many more people pay income tax than inheritance tax, meaning the political potential for cuts could theoretically be greater.
Only 4 per cent of estates paid inheritance tax in 2021, according to HMRC. Some 32 million people paid income tax in 2022, with four million of them paying a rate 40% higher.
“Desperate briefing from a desperate Prime Minister”
However, Labor insiders pointed out that the party with much more likely to match the income tax cuts passed by the Tories before the election than the abolition of inheritance tax.
If Labor pledges not to scrap any announced income tax cuts, James Murray MP, the Labor shadow financial secretary at the Treasury, responded to reports that scrapping inheritance tax was being considered: “This is a desperate briefing from a desperate prime minister who is spending the Christmas break trying to keep Tory MPs on his side.”
“There have been 25 Tory tax rises since the last time. elections. With families across Britain struggling to pay a living wage and our NHS on its knees, Rishi Sunak is trying to buy off his supporters with an unfunded tax cut for millionaires.”
Overall The tax burden is projected to calculated based on tax receipts as a percentage of GDP, will still reach highs not seen since the late 1940s, despite new tax cuts in the fall.
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