It’s time for the Tories to address the hated inheritance tax

Jeremy Hunt should help working people (Image: Aaron Chown/PA) In a poll of the most hated taxes, inheritance tax (IHT) came top with 24 percent disapproving of it, despite only four percent of people actually paying it. It is the principle that appals most people, taxed money hard-earned by an older generation being taxed yet again by a greedy government. At a rate of 40 percent over the basic allowance of £325,000 (plus an extra £175,000 for property), it is a hefty amount to find. Penalising people at their most vulnerable, following a family death, younger people may face hardship in finding the money to pay the taxman before being granted probate. With high house prices meaning many more people have to pay IHT, it is a problem created by the government itself which allowed a decade of ridiculously low interest rates to inflate property prices. Now by freezing the tax threshold, fiscal drag means thousands more are included in the hated tax. Property ownership is the greatest engine for social mobility and passing on some of that money to the next generation so they too can invest in property should be at the heart of Conservative aspiration. It was noticeable that when the Conservative Party was struggling to break through after ten years of Tony Blair’s New Labour, it was their pledge in 2007 to raise the IHT threshold to £1m that started to shift the polls in their favour. At that year’s party conference, Shadow Chancellor George Osborne declared that he was on the side of ‘people whose only crime in the eyes of the taxman is that instead of spending their savings on themselves, they want to pass something on to their families.’ The Tories leapt five points in one week, enough to discourage Brown from calling a snap election, and just three years later Cameron claimed an election victory. To now pledge to abolish IHT could give the Tories another lift in the polls, putting clear blue water between them and Labour. Left-wingers hate the idea of inherited wealth because it gives power to individuals, allowing them to stand up to the government. Socialists want us all to be dependent on the state so it can better control us. Abolishing IHT would show the Tories are on the side of the aspirers and the freedom-lovers—the same people who voted Brexit and work hard to liberate themselves from government dependency. Inheritance tax does not raise a huge amount of money. This year it is forecast to bring in £7.2bn, just 0.7per cent of all receipts and 0.3 per cent of national income. But its value as a pointer for the direction of travel for a future government is enormous. It is symbolic of a smaller state in which families are more able to look after themselves rather than constantly wanting more hand-outs. At the very least raising tax thresholds in line with rising prices would give families a bigger proportion to pass on. It has been estimated that keeping up with inflation would allow a family to leave their children some £1.6m rather than £1m. By not raising thresholds, it is forecast IHT will impact 283,400 estates over a seven-year period. Of those, nearly 50,000 families would not have paid any IHT if the Chancellor had raised thresholds in line with inflation—nearly four times more than predicted by HMRC . The Tories must start becoming the party that helps working people not hinders them. That saves them money, not forces up their cost of living. Over the last 13 years, the Tories have taken more money from us than any government since the Second World War. The state has grown fatter, not leaner. It is time now for the Tories to signal an about-turn in their mismanagement of the economy. At one stroke, by abolishing IHT, they could cut the Gordian knot of big government and re-energise their grassroots supporters, giving them a reason to get out and vote Conservative. Just like it did back in 2007, the pledge could undermine support for Labour and make the next election a real contest.