Chancellor Jeremy Hunt is said to be considering cutting inheritance tax in half in the upcoming Spring Budget to help underline the political divide with Labour.
Any changes to the controversial levy on March 6, will be part of Prime Minister Rishi Sunak’s “gear change” on tax.
Downing Street is reportedly considering a range of tax cuts, describing reports of scrapping inheritance tax as “speculation” but halving it could be a “live option”.
Inheritance tax currently stands at 40 percent and is charged on the part of an individual’s estate above the £325,000 tax-free threshold.
The levy applies to four percent of Britons and scrapping it would cost the Treasury around £8billion a year.
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The tax is divisive with many arguing it is important for social mobility while others say it is a “death tax” on earnings already taxed.
Former Home Secretay Dame Priti Patel backed a cut in inheritance tax, saying: “As Conservatives we believe in promoting economic freedoms and giving people more control over their lives and their money, and that must include the freedom to control what happens to the future of the assets and savings they’ve work hard to acquire.”
While the Conservative Growth Group’s co-leader Ranil Jayawardena said: “It’s not fair, it’s not Conservative and it needs to go.”
A cut to inheritance tax was previously considered for the Autumn Statement in November but instead, tax changes focusing on boosting economic growth were announced.
Labour has rubbished changes to inheritance tax as a “desperate briefing from a desperate prime minister who is spending his Christmas break trying to keep Tory MPs on side”.
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