Osborne set to accept Redwood recommendation of abolition of inheritance tax on main home

The Daily Mail is reporting that George Osborne will accept a recommendation from John Redwood that inheritance tax on the main family home should be scrapped.

A Tory source told The Mail:

"The tax penalises people who save for their future. We want to send a signal, particularly to those in London hit hard by this, that we will act.  The people who will benefit the most will be young people who will not have to pay tax on their parents' estates."

The devil will be in the detail of Mr Osborne's response to Mr Redwood, however.  George Osborne has said that there will be no "up front, unfunded tax reductions" promised before the next election.  It may be that the Shadow Chancellor will undertake to abolish the tax on the main family home as and when resources allow him to do so.  Inheritance tax was the second most unpopular tax in a survey for The TaxPayers' Alliance last year.

5.35pm response from the TaxPayers' Alliance: "This announcement from John Redwood is very encouraging because it shows that the Conservatives are starting to understand that Britain's growing tax burden is hitting families as well as businesses. The proposal is not a complete abolition of Inheritance Tax but, by excluding the main home, it will go a long way towards addressing the injustice of the death tax faced by millions of ordinary families across the country. Hopefully David Cameron will listen to John Redwood and commit the Conservatives to this proposal. Congratulations to the Economic Competitiveness Commission and Lord Forsyth’s Tax Reform Commission, which first came up with the policy."

6pm: The story is actually from Paul Waugh of the London Evening Standard.  Owned by the same group, Standard stories often appear as Mail stories online.

Comments

[Adam in London]

Lovely idea, but can we think a bit more about the justification.

The main home isn't a good device for you to save for your future unless you unlock the value before you die by essentially selling part of it off.

The main beneficiaries are also unlikely to be the young. You can expect to live well into your fifties before both your parents have passed away these days.

[Andrew Lilico]

Might there, at the same time, be a compensating adjustment to the capital gains tax rules for the primary dwelling?

[Ken Stevens]

YEEEEEEEESSSSSSSS!!!!
At last an attractive and distinctive soundbite for the electorate.

Adam in London | August 16,17:30
It's not to do with motives of investment. It's simply resentment that, having worked so hard to buy the stately pile over several decades, it is really galling to know that the State will take a sizeable chunk of the value we had expected to pass on to our descendants.

[clive elliot]

This would be a totally misconceived policy. Remember that taxes affect behaviour. If your main home is IHT-exempt, then get or keep as big a one as possible. This proposal would ossify the market in more expensive houses, pushing prices higher and higher; what people gained from the exemption they would lose in having to pay more for housing.

Its right to reduce IHT, start off by halving the rate and doubling the threshold.Memorable and easy to understand.

[ACT]

'Lurch to the right! lurch to the right! three lost elections! learn our lesson, why can't we?!' would of course be the reaction of the Roons had this been, say, a Cornerstone pamphlet, rather than the used and abused Redwood bravely trying to dig Dave and callow mate out of the hole they've dug us into. Still, why on earth should two men like Cameron and Osborne, who've spent the last two years trashing every traditional Tory value in order to, uh, achieve a ten point opinion poll lead for Labour suddenly rediscover the merit of Thatcherism? What's in it for Dave (heir to small 7 figure fortune) and Gidders (heir to substantial 8 figure, at least, fortune)? Oh wait.

[Mark Fulford]

Consolidating your assets into a single primary dwelling upon the imminence of your death will become an art-form.

[Umbrella man]

This is a tax cut for the wealthy and not for the poor. Disappointing.

Which idiot Tory spokesman talked about it benefiting London most? Amazing political deafness.

[Sean Fear]

Mark Fulford - presumably there could be a qualifying period of ownership before the relief applied.

Umbrella Man - politically this is astute. I can assure you that IHT is very much resented by the sort of London voters who don't see themselves as rich, but who've found their homes worth more than £285,000. There are also lots of marginal seats in London - it's the sort of thing that would go down well in a seat like Enfield North.

[601]

"This is a tax cut for the wealthy and not for the poor. Disappointing."

You obviously havn't been in London or south east recently.
Most of the characters in EastEnders would have to pay this tax.

Depending on how it would be paid for if he promised to abolish this tax on "the main home" than the Tories would win all the Lab/Tory marginals in the SE of England.

[Alan S]

Why on earth couldn't they have announced this earlier?

This would have kept grassroots happier.

I sxpect a big upsurge in enthusiasm for the party leadership in your next readers' poll Tim.

[Editor]

Let's be a little cautious with our comments. The idea that George Osborne is accepting the recommendation comes from a report in the Daily Mail online. I want to check the nature of his acceptance before making my own comment.

[Andrew Lilico]

IHT should probably be eliminated altogether, but making the primary dwelling exempt will, in practice, reduce it to a tax on the very few.

However, the primary dwelling is already tax-favoured as an investment in particular by not attracting capital gains tax and it would seem unfortunate to favour it even more - I would have thought that this makes it all the more urgent to address the capital gains tax issue. (I've previously recommended introducing a capital gains tax exemption allowance based on a consumption value of the primary dwelling. You can read more about this here: http://www.cpre.org.uk/filegrab/the-taxation-of-property.pdf?ref=1695)

[Mike A]

i) This is incredibly stupid politically.

A real lurch to the right, it sends totally the wrong message.

ii) This is *even more stupid* economically.

If you have, say, £3bn to blow on reducing the tax burden, you should do it by reducing marginal rates, *not* by incentivising people to plough more money into their houses. Andrew Lilico hinted at it: If you get charged for capital gains on other assets, why not houses?

People should be charged for the capital gain on their houses, as with any other investment.

This is only going to cause trouble.

Mark Fulford is wrong: consolidating your assets into a single dwelling will probably never need to reach art-form level! If you can only write off £2,000 of your house as 'fixtures and fittings' for stamp duty, surely it'll be the same for this? Nail an ingot to the back porch and you'll be golden. I'm going to go tell my parents to build a solid gold shed in the garden.

Ken: We should moving more taxation onto housing wealth, and off income-generation. We should be looking to level the playing field so that risk-taking and not rent-seeking, is rewarded. This clearly does not do that.

Umbrella man - 'tax cuts for the poor'? How about 'tax cuts for ordinary people'.

[JimJam]

This is in effect a double tax and wont be missed - except by a few churlish prigs in the Guardian.

[GT]

I am all for sensible tax cuts and inheritance tax is a double tax that should be cut.
However, exempting a person's residence does not make sense. Many very elderly people are better off in smaller homes that they can manage and heat or even in nursing homes for their last years, where they can enjoy better care. This change would encourage some people to stay in their homes beyond the point at which they can sensibly care for themselves.
A better solution would be to raise means testing thresholds for personal care and inheritance tax thresholds on estates. In this way a person who chooses to sell their home to finance life in a care home will not be penalised and a large home would be back on the market.
The tax system should be designed to be as neutral as possible between these kind of life choices.

[Sean Fear]

Critics miss the point that it is a very quick win, politically. We need quick wins.

[Mark]

"Umbrella Man - politically this is astute. I can assure you that IHT is very much resented by the sort of London voters who don't see themselves as rich, but who've found their homes worth more than £285,000. There are also lots of marginal seats in London - it's the sort of thing that would go down well in a seat like Enfield North."

That makes sense Sean, and I do agree with the idea, but I also think Umbrella Man had a point when questioning the reference to London as surely the idea will go down even better in other areas where house prices have rocketed - eg. there are plenty of houses in the suburbs of Leeds which are now over the IHT threshold, the owners being the kind of people we need to win over.

[Oberon Houston]

I see the BBC News has now apologised for reporting the Redwood story using the national anthem clip as a backdrop, agreeing that this was 'not appropriate' when reporting the tax story. What a shower honestly.

[Andrew Lilico]

Mike A

I do agree with you that we shouldn't be tax-exempting the primary dwelling even further, but it seems to me that, *if* the capital gains tax issue were to be addressed (which we might sensibly do), then removing inheritance on the primary dwelling could be a pleasingly pragmatic way of reducing it to a tax on only the super-wealthy. That doesn't seem economically stupid to me, or electorally unwise.

Personally, I see no merit in inheritance tax at all, and would rather see it abolished, but having it only apply to those with more than, say £300,000 of non-primary-dwelling assets would make it all-but-irrelevant anyway. The rich will place their funds all in trusts and avoid it; the middle classes will only have their houses to take them above the threshold. So it will become a tax on working-class lottery winners.

[Traditional Tory]

I can't see the logic in this, either.

Once the inhabitants are dead the home becomes just another asset alongside stocks shares cash and antiques.

By all means raise the threshold and penalise people less accross the board but why discriminate in a manner that is not only unfair but may - as people have pointed out - have undesirable knock-on effects?

[Andrew Lilico]

But, Traditional Tory@18:12, the current regime gives the eldery incentives to sell their homes late in life so as to transfer their funds to their offspring and avoid the tax. It seems unfortunate to create such incentives - wouldn't we be a nicer society if we allowed the elderly the dignity to die in their own homes?

[Mark Fulford]

"Mark Fulford is wrong: consolidating your assets into a single dwelling will probably never need to reach art-form level!"

I think you misunderstood me slightly. A 70 year old with a £500K house and £500K in investments will have a £160K incentive to move to a £1 million mansion. The 4% Stamp Duty compares quite favourably to 40% death duty. If a time-limit could be worked (problematic because of people who die but weren't trying to avoid tax) it would only make guessing time-to-live slightly harder.

[Annabelle Thomson]

Yes I agree with Mark Fulford most people will just consolidate other assets into a single primary dwelling. I am not impressed with George Osborne, he has not laid a finger on Labour in Government and is quite clearly out of his depth and looks very lightweight. DC should have had the courage to sack him when he had a chance.

[Mike A]

Sorry, Mark, I was being a bit facetious! I just meant this is full of holes.

Andrew: I don't think abolishing IHT should be a priority for our economic policy. I'd rather spend the money on a capital tax reduction.

[Andrew Lilico]

Mike@18:38

That's interesting. What "capital tax reduction"?

[Mike A]

Andrew: A 'capital tax' in British tax-code parlance is really corporation tax. This paper makes quite a persuasive case for it.

http://post.economics.harvard.edu/faculty/mankiw/papers/dynamicscoring_05-1212.pdf

[Andrew Lilico]

Mike A@18:49

So you want to cut corporation tax, and you believe that such a cut will pay for itself through dynamic efficiencies?

But then you don't believe that such a cut will cost anything. So why not eliminate inheritance tax as well? Why should we just change one tax at a time? Why don't we propose some restructuring of the way that taxes are raised, if that's what we believe in? Aruging each tax on its individual merits misses the synergies in multiple tax changes, and misses the combination burdens in multiple taxes.

[Traditional Tory]

But, Traditional Tory@18:12, the current regime gives the eldery incentives to sell their homes late in life so as to transfer their funds to their offspring and avoid the tax. It seems unfortunate to create such incentives - wouldn't we be a nicer society if we allowed the elderly the dignity to die in their own homes?

These days you are more likely to die in a nursing home with your home being sold to defray expenses.

Given the situation we have - and I detest all taxes but accept that we cannot abolish them - we have to recognise that if we are going to allow relatively well-off middle-class beneficiaries to keep more of their windfalls than hitherto, we are going to have to reduce government spending in some other area.

NHS? Education?

[Mike A]

Andrew: No.

First, that paper explains that (simplifications, wrinkles, exemptions and so on aside) at today's tax rates, just by adjusting tax rates, there is simply no tax cut which 'pays for itself'.

If I have 3bn to blow on tax cuts, I'd rather spend it on reducing the corporation tax burden and then look to the income tax burden before I started even thinking about IHT.

There are things I would do to IHT (change it to, say, being assessed on the individual as a windfall, rather than at the estate level).

As a priority for our time in Government, it should be nowhere near the top of the list. In fact, when in opposition, it should not even be on the list.

p.s. Synergies in multiple tax changes? Do me a favour, Andrew...

[TomTom]

This is a tax cut for the wealthy and not for the poor. Disappointing.

Half-baked response. Farmland is exempt currently - surely City boys buying farms should be hit will IHT. Government Securities are exempt as are shares in private companies.

If you want to go further - the rich do not have assets for IHT purposes - their homes are owned by Offshore Trusts and they only pay 0.5% Stamp Duty instead of 4%.

Only the lower middle class pay IHT. The way to avoid it is to load up the property with debt and transfer assets abroad while keeps liabilities in the UK - continually re-mortgage/ The main rule is not to have any net assets in the UK.

Just leverage to the hilt and die in debt

[Drusilla]

I love this idea, especially if it's a stepping-stone to abolishing inheritance tax completely.

(Now, see, people? I'm not always negative, am I?)

[Mike A]

I should say:

"As a priority for our time in Government, reducing the IHT burden should be nowhere near the top of the list. In fact, when in opposition, it should not even be on the list."

There are simple things which we could do, (like restructuring, as I said) but they're really not things to talk about in opposition.

Blowing £3bn on this is a supremely inefficient way of cutting tax. The point of the paper I highlighted was that it demonstrates how much more effective some tax cuts are than others. This is one of the worst.

We're planning to incentivise old people to buy the biggest possible houses for no apparent reason.

[Mike A]

TomTom - I agree about the other exemptions as well. I'd ditch the lot.

Why pick winners?

[Ken Stevens]

Mark Fulford | August 16,17:42
"Consolidating your assets into a single primary dwelling upon the imminence of your death will become an art-form."

Those with sufficient other assets (i.e. in present terms £385,000+ in addition to primary residence value) to make such a consolidation worthwhile already, I suggest, are those who can afford to pay for complex estate planning measures.

[Tory cuts come with equal tax rises]

George Osborne has clearly pledged that all changes to the tax system under him will be tax neutral - cuts will be offset by rises to leave us overall no better or worse off.

Here it is from the horse's mouth:
"We will not be promising reductions in taxation at the election. Any changes in taxes will be revenue-neutral."

So how can anyone get excited about a *possible* tax cut announcement by Osborne when you know it comes with an equal and opposite tax rise?

In short, Osborne is ring-fencing the current ridiculously high level of government spending (whilst also criticising if of course) because he does not have the backbone to try and do the right thing and cut taxes.

There is no lurch to the right, Osborne couldn't have been clearer that he won't reduce the overall level of taxation.

[Mike A]

If there is revbalancing of the tax system away from inheritance and onto consumption and wealth creation, I'd say that was a lurch to the patrician, nasty right (not even the economically liberal right).

Mind you, that's an odd post there...

"Tory cuts come with equal tax rises" is from George Osborne's office and I claim my five pounds.

[Sean Fear]

Mike A. This proposal, if it is a proposal, is intelligent politics.

It may well make more economic sense to cut corporation tax, rather than IHT. But trust me, part of my job is IHT planning, and the public hate the tax. This proposal is good politics, which will please C1 and C2 voters in London and the South East, where there stacks of marginal seats.

[Mike A]

"But trust me, part of my job is IHT planning, and the public hate the tax."

It's funny. My dad is a judge and he says everyone he meets is a criminal.

[Ken Stevens]

Mike A | August 16, 2007 at 18:01
"We should be moving more taxation onto housing wealth, and off income-generation."

I see the overall principle you're expounding -- but it's not too appealing to us silver surfers whose income-generation is no longer at a level to benefit significantly from lower taxes, yet face a sizeable lump from the inheritance we had expected to pass on, before realising that the ordinary house we bought had outstripped the IHT limit.

Oh dear, so no wondrous election slogan after all?
A pity, 'cos you'll need all you can get!

[Mike A]

Ken: I'm a prospective inheritor who'd be hit by IHT, but I don't think IHT reduction should be a serious issue for us.

I also think running a general election campaign on tax would be silly. When the Government talk about hospitals here and now, and we promise hypothetical tax reduction, we just look out of touch.

There's a deeper issue here too, which came out in the grammar school stuff. Are we a party of the middle class, or are we a party of non-class-based principles?

I know which mantle I prefer.

[Traditional Tory]

There's a deeper issue here too, which came out in the grammar school stuff. Are we a party of the middle class, or are we a party of non-class-based principles?

At base the grammar school row was about preserving and extending educational excellence in a tried and tested form. A matter of national interest was at stake. Middle class preferences were a secondary matter.

The IHT proposals are simply about giving the middle class some of its own money back. There's nothing intrinsically wrong in that, but I don't see that it will benefit the nation as a whole.

I'm not sure there are many votes in it. However, I suppose it might tempt those who are anticipating a beneficial death in the family over the next few years...

[davidg]

If true, this is a very sensible proposal. IHT was intended to tax the rich and many ordinary people have entered the IHT net through the failure to grow the nil rate band in line with house inflation (the main asset of most people). Conservatives have to be faster on their feet in Brown's Britain. This is a popular move by the Tories and closes off the option to Gordon Brown.He is clever enough to do the same thing and this hopefully is evidence that the Tories realise what they are up against.

[Dominic]

At last an announcement that means some thing to the Public at large I am surprised at the reaction of so many moaning willies that can not see the majority of house owners in the UK are in the IHT net and will benefit
I can only assume there are Labour infiltrators that do not approve as it could be an election winner

[steve]

I thought Traditional Tory was a Labour suppoter before. Now having seen his reaction to Redwood's IHT proposals I know he is.

[Stephen Tolkinghorne]

"People should be charged for the capital gain on their houses, as with any other investment."

Yeah ! How dare people own their own homes and aspire to better themselves materially and look after the welfare of their families. Damn their eyes !

This'll be a real vote loser with the general public, as the vast majority of home owners are queuing up to pay Gordon Brown 40% of the value of their homes that they've spent the best part of their working life paying for.

They don't want to leave a financial legacy to their children and grand-children - they want to give it to GB so that he can blow it on housing for asylum seekers and compensation for criminals who had their 'human rights' breached when they were locked up for murder, etc.

Clearly Mike A is barking mad ! Either that or Gordon Brown in disguise.

[Stephen Tolkinghorne]

"There's a deeper issue here too, which came out in the grammar school stuff. Are we a party of the middle class, or are we a party of non-class-based principles?"

The Conservatives owe it to those whom they helped become home-owners in the first place to get rid of IHT. It's a tax on prudence, individual responsibility and thrift.

There's no point in them saying that they helped Britain become a nation of home owners, but they'll take back the equity they built up when they die.

It is the moderately well-off who are generally hit hardest by IHT, because they can't afford accountants and lawyers to circumvent the Treasury rules. Once again the burden falls most heavily on those who can least afford it.

If Osbourne does confirm he's taking up this proposal of Redwood's, he certainly goes up in my estimation (only a very little 'though - still much, much, much more to do !) - but not that I'm sure he'd lose any sleep if he didn't.

[Dominic]

I would be very suspicious of many of these postings these drips that rebuke an excellent policy can not be Conservatives
A friend of mine who's Father's ex Council house has just been valued at £550,000 will be overjoyed.

[Tory cuts come with equal tax rises]

You're really not getting the trick are you?

Osborne has publicly pledged for the next general election that for *every* pound cut from the tax system, another will be *added* to leave net no change.

Of course IHT is unpopular, but if he offsets the cost by raising stamp duty, for example, then it front loads the tax now and would thus prevent more people from being able to buy a home in the first place.

Considering Osborne's pledge, he would clearly not announce a cut without already knowing where the offsetting rise will be, so this kind of half-the-good-bit-of-the-story leak/announcement could be seen as deliberately deceptive.

Replacing a very unpopular tax that won't affect many for decades with one that bites now reminds me a frying pans and fires...

Considering Osborne's pledge, you can't get excited about any cut (however welcome it appears in isolation) until he reveals its twin rise.

BTW, Mike A - ask Tory T if I work in Osborne's office... ;-)

[Matt Davis]

There are people on this thread who plainly do not know what they are talking about. When I ws 23 my Mother died and my younger sister and I were forced, against our wills, to sell the house we had grown up in and still at that point resided in in order to pay the Inheritence Tax on it.

No doubt some politics of envy types will be thinking serves them right for being from a rich family. Well nothing could be further from the truth, my late Mother was a Local Authority social worker, in the days when that was still a poorly paid occupation and my Father had been a salesman. we were, at best, lower middle class, classic "strivers".

Inheritence Tax is an iniquitous disincentive to people to provide for their futures and that of their children and this is a welcome, if belated, proposal.This is the sort of thing that will resonate with the people who we need to vote Tory in order to win an election and it needs to be presented as rectifying a blatant unfairness in the taxation system.If that is done then this is a definite vote winning policy.

[Stephen Tolkinghorne]

TCCWETR: "Osborne has publicly pledged for the next general election that for *every* pound cut from the tax system, another will be *added* to leave net no change."

Can you give us a link to this, as I've not heard it. I'd be very interested to, 'though.

[Alistair]

Looks like the Tories are reverting to Thatcherite type.

That's right. Soak the poor who dont own homes or live in small houses below the threshold and arrange for Mummy and Daddy's wealth to cascade down untaxed to well-heeled greed-crazed ex-public schoolboys and hedge fund executives.

The Tories were always a class party. Look how they're all coming out of the woodwork to applaud the swivel-eyed Vulcan from Planet Tharg.

So sad none of this Tory cashcade will happen because this is just one more nail in the Tory coffin.

"Call me Dave" has been rumbled as Son of Thatcher.

Pathetic!

[Tory cuts come with equal tax rises]

"Can you give us a link to this, as I've not heard it"

Hi Stephen - yes of course, it is all over the net, but here is a report from the TPA themselves on Osborne revenue-neutral pledge:

http://tinyurl.com/3yx4gu

[Stephen Tolkinghorne]

"The Tories were always a class party. Look how they're all coming out of the woodwork to applaud the swivel-eyed Vulcan from Planet Tharg."

Oh, oh, looks like Dave Spart, the class and eco-warrior has discovered ConservativeHome. What took you so long ?

Yeah, bring the revolution comrade ! Power to the (welfare addict) people !

[steve]

Alaistair it's your post that'spathetic. If you live in southern England the chances aryour going to have to py thisiniquitous taxwhatever 'class' you are. Why not try to use your brain for once?

[Stephen Tolkinghorne]

"Hi Stephen - yes of course, it is all over the net, but here is a report from the TPA themselves on Osborne revenue-neutral pledge:.."

Thanks ever so for the excellent link that you sent, TCCWETR.

It looks like that snake in the grass, Osbourne, has learned a thing or two from the thief-meister general Gordon Brown about sleight of hand, smoke and mirrors, spin and down-right lies.

[Alistair]

Oh dear. Been on the sauce "steve"> Seems he is so upset to meet a real person for a change he's treating the keyboard like he was a sex-crazed octopus.

Or maybe he just cant spell. I wouldnt talk about brain problems if I was him

FYI I was a One Nation Tory until Thatcher wrecked this country and ruined the lives of millions.

Never again.

[DPD]

At last a policy that sets clear blue water between the Conservatives and Labour. I'm still convinced we'll lose the next GE, but at least by moving to abolish Inheritance Tax we'l begin to reconnect with the millions of voters who haven't come out to vote for us since 1992. As somebody who works in the City, I have been dis-heartened of late by my colleagues enthusiasm for Labour and Brown in particular. This however is exactly the kind of thinking that will win back the attention of professionals and the asset owning classes who have long since ceased to believe in the Conservative Party.
Its such a shame that the present "leader" of the Conservative Party wasn't brave enough to announce these proposals himself. Instead it was left to a "Thatcherite right-winger" to confront a hostile audience in the form of The Guardian, The BBC and The Labour Party and take the argument to the country. Unfortunately, just like every other policy announcment, it only seems to reflect poorly on David Cameron and bolster the respect and credibility of those who he has sought to marginalise sice becoming leader.
A sensible move and one that will shift the party in the right in the right direction, but I can't help but think that its too little, too late. Cameron's political epitah has already been written - its now time the Conservative Party danced on his grave.

[Fiona]

I agree with Mike A - I can think of better ways of reducing the tax burden than abolishing inheritance tax.

I agree that it should be a longer-term aim (because it's a double tax, and because it goes against people who have worked hard to succeed), but frankly if the level of services required by people is x and £y are needed to fund them, I can think of worse places to raise those funds than from people who are no longer with us. Over time, of course, as we share the proceeds of growth, we should aim to reduce this and other overly-high taxes.

I appreciate that that can be seen as a callous thing to say, and that there are always circumstances such as Matt's above. But we need to focus our capacity to reduce the level of taxation where it will do the most good, and I am not convinced that IHT is the place to start.

[steve]

I was one nation Tory until Thacher....I doubt anyone who was a Tory would ever object to the removal of IHT on a main dwelling. I expect you're a liar as well as a fool

[Graeme Archer]

Many of these comments defy parody. At least it becomes more and more clear, among the regular contributors, who is actually a Tory supporter and who is positively anti-Tory, whatever moniker they give themselves. The ending of anonymous commenting becomes ever more important the closer we get to an election. The leftwing "Alistair" above me here could easily be quoted by the PM at PMQs as "a commenter in the Tory grassroots", whereas of course he's clearly some sort of demented Marxist.

Oh the tax cut? Yes of course what a fantastic idea. If you really believe that it's aimed at the rich, go to findaproperty.com, type in "Hackney" and "2 bed flat", and see how many hit the 275KGBP threshold. I'll save you the effort: 56% of the 2 bed flats in Hackney, the poorest borough in the country, lie above the IHT limit. So enough of the nonsense about helping the rich, OK?

You were taxed on the income you used to buy that property, why on earth should you be taxed on it after you're dead? No economic theorising will sway public opinion on this matter anyway. Conservatives believe in families, and in helping them to help themselves. After you've been double-taxed to get the hoose, I think you should be able to leave it to whomever you wish without Brown taking more of it back.

[Dominic]

This site is infested with reds in the bed Commies out. First class postings Stephen Tolkinghome I agree most home owners can not wait to give Prudence 40%of their hard earned money even though they get very little in return.
Prudence aided and abetted by Europe has nearly finished off the Channel Islands, who contributes the second largest flow of money into the City of London our friends the Conservative Party protected us until 1997 we all pray for a Conservative Government soon.
Please Editor allow these idiotic postings from the Reds as it really will encourage all of us to focus what dreadful people like Alistair we need to depose.

[Mark]

Matt Davis @ 21;22, I agree with every word.

[David Walsh]

Sounds like a great policy. Let's hope we have the backbone to argue this out with the Left who will, as has been seen by some of the comments, frame this as a tax cut for the rich.

[Fiona]

Graeme - you're taxed at least twice on virtually everything. You pay income tax. Then you pay council tax. Then when you buy something you pay VAT plus whatever other stealth taxes apply. If you save, you pay tax on the interest you earn.

There are extra taxes/supplements/levies on all sorts of things. We should be aiming to streamline and reduce both the number and the amount of taxes.

IHT IS one of the (many) taxes we should aim to remove from burdening people, but it shouldn't be the first.

[Ken Stevens]

If the Tories aren't in favour of thrift and self-reliance, they really have changed.
I worked hard to pay the mortgage, including a second job at times when interest rates went up -- even into double figures, you young wimps ;-)

If the impeccable theorists are to prevail in the Party's consideration of this topic and no doubt others of simply-understood electoral appeal, then I suspect that you'll still be theorising impeccably in opposition for a long time to come.

[Stephen Tolkinghorne]

"I can think of worse places to raise those funds than from people who are no longer with us."

Oh yes, as well as losing their parents, relatives, loved-ones, those left get to see the investment the 'departed' left to them get taken away by Gordon Brown.

You're not taking money from 'the departed', you're taking it from those whom would otherwise receive the assets their parents worked so hard for.

How spiteful and mean can you get ? The burden falls hardest on those who can least afford it.

[Tory cuts come with equal tax rises]

Oh Graeme, no-one is closer to parody than you.

Ask that poor person in Hackney struggling to find a deposit and funds for the stamp duty for a home if they would like (for example) to see stamp duty raised to cover the IHT cut and what do you think they'd say?

What tax is Osborne going to raise to make the cut (and it is far from confirmed!) revenue-neutral? Will it bite now to leave people not able to get onto the propery ladder at all?

Remember, those who can't afford to buy a house because of the upfront costs really have nothing to worry about a tax that they will never personally pay out for anyway and won't possibly be due for decades anyway.

So please don't give us the trendy faux understanding of the poor, because your comment shows that you're clueless.

[Stephen Tolkinghorne]

"FYI I was a One Nation Tory until Thatcher wrecked this country and ruined the lives of millions."

Nice one, Alistair (Campbell ?). You'll be telling us you're Enoch Powell's love child next ;-)

Tell me, do they still throw darts at the piccie of Her Maj on the wall of the Stepney Socialist Workers' Party club ?

[Will]

I want to see where the tax increases are coming from to pay for this before I decide if it is a good move. It wouldn't be the first tax I would cut.

[Stephen Tolkinghorne]

Dominic: "First class postings Stephen Tolkinghome"

Thanks very much for your kind compliment, Dominic. Although, I was a little nasty about Osbourne further on after TCCWETR posted that link - casting doubt upon his sincerity about lowering overall taxation.

[Cllr Brook Whelan]

The acceptance of John Redwood's proposal to scrap inheritance tax will be welcome not just to the grassroots of the Party, it will also be welcomed by millions of potential voters who voted Labour in 1997 and 2001.

Labour will find it difficult to attack this proposal as it will alienate swing voters who will decide the result of the next election.

[greg]

It's a ludicrous policy.

IMO there's a fairly simple compromise. The main family home is exempt until the point at which it is sold.

Either that or abolish IHT completely. But the proposal floated makes so sense at all.

[Editor]

Please continue discussion on this thread with its updated take on Osborne's qualified response to Redwood.

[Alistair]

Well said TCCWETR. The prices of properties in Hackney may well be skyhigh but its the interloping yuppies and traders who are buying them. The poor cant afford to buy. Ever heard of renting.

Some of the Tories on this site are beyond parody. Strangely I find the extreme rightwingers like Stephen Tolkinghorn less offensive than the "caring" Cemeroon types who are just as greedy and selfish but are hypocrites as well.

For the avoidance of doubt I used to be a Tory but certainly am not now. I look forward to seeing them trashed come the next election.