Rishi Sunak has faced criticism for allegedly engaging in a “desperate” briefing on inheritance tax (IHT), amid speculation that it might be reduced ahead of the next election. The government has confirmed that the next spring budget is set for delivery on March 6. With an upcoming general election, pressure mounts on Sunak from Tory MPs for tax cuts to improve their electoral prospects. The Daily Telegraph reported that Downing Street might consider abolishing IHT as a significant policy shift, focusing on halving inflation rather than lessening the tax burden. However, Labour dismissed these reports as an attempt by a “desperate prime minister” to maintain support among Tory MPs.
Labour’s shadow financial secretary to the Treasury, James Murray, criticized the move as favoring millionaires during a period when families struggle with living costs and the NHS faces challenges. He also pointed out the Conservatives’ history of 25 tax increases since the last election. Speculation about the budget’s date fuelled thoughts of a potential early general election, with Murray stating that Labour is ready for a vote “whenever it comes.”
Inheritance tax, often disliked by Conservative MPs, is currently charged at 40% on estates over £325,000. Critics within the Conservative party label it a “death tax,” arguing it taxes earnings that have already been taxed. On the other hand, proponents see it as essential for social mobility and argue that abolishing it would mainly benefit the wealthiest.
Conservative MP Nick Fletcher suggested prioritizing changes to National Insurance, VAT, or income tax over IHT for greater impact. He also mentioned other measures, like boosting house building and restricting immigration, to address the housing shortage. The upcoming spring budget is seen as a critical opportunity for Chancellor Jeremy Hunt to introduce measures to appeal to voters, with the government potentially supporting first-time homebuyers.
Despite these proposed changes, the Labour party and the Liberal Democrats remain critical, citing 14 years of economic challenges under Conservative leadership, with the Lib Dems describing the situation as a “last throw of the dice by a flailing Conservative government.” The budget preparation includes an economic and fiscal forecast by the Office for Budget Responsibility, a standard practice before significant fiscal events
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