The Tories, money and inheritance tax
David Blackburn 6:18pm
Key to Labour’s emerging strategy is promulgating the myth that raising the inheritance tax threshold is designed to protect the Tories’ rich friends from the great unwashed. Despite its sojourn in the wilderness, the politics of envy remains crude at best. Raising IHT thresholds favours hardworking, modest Middle England.
The super rich can protect their fortunes without the help of threshold raises, which are negligible by their standards in any event. James Macintyre proves as much in his latest New Statesman column. When detailing Tory donor Lord Harris’s IHT avoidance, Macintyre writes:
‘The Tory peer, whose wealth is estimated at roughly £285m, donated £90,000 to Cameron's campaign. In 1997, he sold £23m of shares - shares that would have been liable for inheritance tax - and used the proceeds to buy artworks, which are exempt from inheritance tax.’
This casual reference to ‘artworks’ makes Lord Harris sound like a compulsive bric-a-brac enthusiast. Surely anyone can do this? But art is only exempt when listed on the Register of Conditionally Exempt Works of Art. The Duke of Sutherland’s extortionately overpriced Titians don’t grace that list: the contingency that Grandma’s Apostles’ Spoons have sneaked in is remote.
After the 12 year property boom, huge numbers of modest earners now posthumously pay the government for the privilege of having snuffed it. They should not do so. Take one example: a family friend, who was a career soldier rising to the rank of Colour Sergeant, retired to a two-up two-down in suburban Essex and lived off a combination of state and service pensions for 27 years. He died in 2006 and his estate yielded £84,000 in inheritance tax. The deduction means that a maximum of 3 of his 4 grandchildren will enjoy the opportunities that a private education can offer; he had intended all four to do so, among other things, such as enabling his children to move up the property ladder.
Inheritance tax penalises aspiring Middle England. The Labour party knows this, which explains its proposed threshold hike when it was interested in winning marginal seats south of the River Trent. The Tories shouldn’t give an inch, an IHT cut is precisely the sort of beneficial pledge they should make.
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General Zod
December 3rd, 2009 6:37pm Report this commentThe Tories absoultely must not give on this. The threshold is so low that almost any house-owner in the South East wil be subject to IHT on his estate. When people think about this (those who do think) they will realise that this is not a policy for the rich, but for the real middle England.
David
December 3rd, 2009 7:08pm Report this commentI live in NW London in my street and area you cant buy a house or flat for less than £350K wish means raising it to £1m will help every person middle class or poor if you were rich like Brown likes to go on aboutyour house is more likely be over £1m and this raise want help you.
Just showes what lies brown talks even i know this but brown cant
oldtimer
December 3rd, 2009 7:12pm Report this commentIf the Conservatives were on the ball they would say just how many are /will be affected by the current thresholds. Some zeros need to be added to the 3000 that Labour rabbits on about.
...Unless, of course, they already know the answer and are saving it up for later.
JohnPage
December 3rd, 2009 8:14pm Report this commentHas Brown already written off his southern England marginal seats then? Quite apart from the numbers, how would this rhetoric of envy play in the SE? Pretty badly, I'd imagine. How many seats could Labour lose this way?
The Tories need to take this by the scruff of the neck and stop wimping out. Present IHT thresholds are at asset levels which many potential SE Labour voters will aspire to.
It again shows Brown's inability to imagine the aspirations of people outside his core constituency.
paul holdstock
December 3rd, 2009 8:15pm Report this commentperhaps if the tories continually pointed out that by raising the IHT threshold to £1,000,000, ONLY millionaires would pay it. as if brown were to have his way EVERYONE would pay the tax.
it strikes me as weird that the tories have'nt seen this obvious way to lance the boil brown is trying to engineer over the subject.
after all " labour want to tax all of you, the tories only want to tax millionaires" would'nt be a very helpful labour slogan in any upcoming election.
not forgetting that with the broken manifesto promises by labour,
the " you can't believe/trust a word they say" slogan will neutralise any advantage ANY labour policy might bring them.
Alan Phillips
December 3rd, 2009 8:15pm Report this commentthey should do a "Truth about IHT" PPB and expose the lies that Labour tell.
TrevorsDen
December 3rd, 2009 8:29pm Report this commentThe ONLY people who would pay IHT set at £1 million would be millionaires.
Labour talk as if the proposal would exempt millionaires !
But then these thickos are the ones who 'elected' Brown leader in the first place.
2trueblue
December 3rd, 2009 8:44pm Report this commentBrown was so quick to follow raising the level back then, now he will back track. Voters beware.
Ben
December 3rd, 2009 9:33pm Report this commentThe proposal to increase the inheritance tax threshold made at the Tory Party Conference of 2007 was the thing which turned the tide against Labour and prevented Brown from calling an election at that time.
Boudicca
December 3rd, 2009 9:47pm Report this commentI agree - the Tories' inheritance tax proposals should not be downgraded.
I am a divorced single mother of two. I live in an ex-local authority house (which I own) and work in the public sector. I should be a natural Labour voter, but I'm not. My house is in the SE - although modest, it is worth in excess of £300,000. Add in the small amount of savings I have been able to make plus a recent (modest) inheritance, and I am worth well over the IHT thresh-hold.
Labour propose to legislate so that couples can offset IHT by halving it (which you can do anyway by becoming 'tenants in common' in the family home rather than 'joint tenants.' That won't help me or my sons - there is no partner to divide the proceeds between. So, if I get run over by a bus, my sons will lose out.
That is one reason why I won't be voting Labour. The other 1000 reasons are related to the appalling mess they have made of the past 13 years.
Nicholas
December 3rd, 2009 10:24pm Report this commentDon't forget New Labour's stealth council tax plans to extort money for home improvement and "nice views" from the windows. The database is up and running, the data is already being collected. Inspectors will call to check out your conservatories and windows. East Germany is alive and well and living vicariously through the twisted ideological dreams of New Labour ministers.
http://tinyurl.com/ybu2g33
The IHT controversy is small beer by comparison.
Ian Walker
December 4th, 2009 7:01am Report this commentIf IHT limits were per beneficiary, rather than per estate, then you could really achieve the wealth redistribution that is always claimed to justify the immoral double taxation.
Naomi Muse
December 4th, 2009 7:59am Report this commentWhilst this phoney election is going on the Tories are best to keep their powder relatively dry so that Labour show their hands in their election manifesto and proper policies can be aired and substantiated with known figures.
As to IHT, both parties will have to do this one. So it's a storm in a pre-election tea cup, no more, no less.
Dorothy Wilson
December 4th, 2009 8:43am Report this commentPerhaps the Conservatives should introduce a special tax for ex-PMs who make a large fortune on the back of the name they have made in politics and specifically on the lies they told to take the country to war.
Northern John
December 4th, 2009 2:35pm Report this commentI disagree - I'm as Tory as they come, but I think that if you have to tax, you should tax unearned wealth before you tax earned wealth.
The idea that the person who has died pays the tax is nonsense. That person is dead. The people who inherit the unearned wealth pay the tax - and quite right too.
If you want a comfortable lifestyle, then bloody well go out and earn it.
David's example of the fourth child not being able to attend private school is also a nonsense. I'd look at it as getting 75% off school fees for all four children. What's to complain about?
David Priest
December 4th, 2009 6:13pm Report this comment@Northern John
Well said!
Steve Davey
March 10th, 2010 11:56am Report this commentA case study regarding Inheritance tax - bought a house in 1992 in South London. Have a partner, one child and another on the way. House is in my name as I bought it and I pay the mortgage.
If I die tomorrow under Gordon Brown's policies, my partner would have to find around £90k to pay the death duties. Under the Tory proposals, there would be no death duties.
I am not a millionaire. My house is a terraced inner city house, but in London so house prices have gone up to around £600k. Due to the recession our household income over the past couple of years has been around £35k.
So, the Labour Party in effect:
a). forcing me to get married (an institution I don't believe in) in order not to be taxed almost 3x our annual household income on my death
b). Forcing my partner to sell our house and pay a disgustingly high tax if I die
c). forcing me to take out life insurance just to pay their unfair tax
d) forcing us to vote for David Cameron!
One of the biggest concerns is just how David Cameron is letting the Labour Party lie so much about this issue. Are they truly incompetent or are they just doing the most risky Rocky-IV-pretending-to-be-on-the-ropes strategy before they come out punching? I have been a life long Labour voter, but I hope to God that this is the latter.
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