Labour interest in changes to inheritance tax slammed as ‘siege on homeowners’

Labour’s “interest” in changes to inheritance tax has been criticised as a “siege on homeowners” by Conservatives.

Shadow chancellor John McDonnell confirmed Labour was “looking at” rules around inheritance, which allow wealth to be passed from generation to generation, in an attempt to create a fairer system.

Mr McDonnell said the party was considering bringing in a lifetime gifts tax, which would slash the current minimum threshold for paying tax from £475,000 to £125,000.

Sky’s Sophy Ridge asked the shadow chancellor if he was “attracted to the idea” of scrapping inheritance tax and replacing it with a lifetime gifts tax, as recommended in the report Land For The Many, which he commissioned.

“We are looking at it,” Mr McDonnell said. “It might be one of those ideas and we are consulting on it at the moment… I think it’s interesting.

“We need to have a fairer system of how we can ensure that wealth is more fairly distributed – that’s one idea and we are listening to a whole range of ideas.”

However, Conservative Party vice-chairman Marcus Jones described the idea as a “siege on homeowners”, saying it would prevent parents passing on homes to their children.

“John McDonnell has yet again confirmed Britain’s homeowners would be under siege with another Labour tax raid on people’s homes,” he said.

“Labour’s new gift tax proposals would slash the inheritance tax threshold meaning families up and down the country would be hammered, simply for passing their property to their loved ones.

“Only the Conservatives are committed to lowering taxes and helping people achieve home ownership through our policies such as Help-to-Buy and cuts to stamp duty for first time buyers.”

Mr Jones said current inheritance tax rules affect 640,000 households each year but claimed 10 million would be affected under a lifetime gifts tax.

But Labour said the 10 million figure was too high because only 63% of homes are owner-occupied.