Inheritance tax: have Tories betrayed their base?
'Gross injustice': Tories appear to renege on manifesto pledge to raise inheritance tax threshold to £1m
GEORGE OSBORNE's pledge in 2007 to raise the inheritance tax threshold to £1 million revived his party's fortunes and, in the view of many pundits, stopped the then Labour Prime Minister Gordon Brown calling a snap election. The promise was reiterated in the 2010 Conservative manifesto – but today it looks as if the current £325,000 threshold will remain until 2019 in order to pay for social care reforms.
The government's decision – still unconfirmed at the time of posting - makes the Daily Mail question if we're all in it together after all. It looks like "yet another example of the responsible middle classes being penalised for their thrift, while the feckless – along with the tax dodgers and the bankers – feel no pain at all", the paper claims in an editorial.
For the Daily Telegraph, inheritance tax penalises only "aspiration, thrift and independence". Given the proposed six-year freeze and the effect of inflation, many more will now be paying this "ultimate stealth tax".
It is, for the Daily Mail's Melanie Phillips, a "gross injustice." If the plan is confirmed it means that "to prevent people in residential care from having to sell their homes - and thus deprive their children of their inheritance - the government will punish those children for that inheritance by taking more from them in tax". Matthew Stephens, inheritance tax expert at Prudential, agrees that many could face a "sizable" bill if they do not plan ahead.
Grassroots Tories are outraged. ConservativeHome's Harry Phipps says the move is "Bad politics. Bad economics. Bad morality".
However, The Independent points out in an editorial that the "vast majority of homes outside the Southeast will remain exempt" from inheritance tax, despite the freeze.
Health Secretary Jeremy Hunt, who faces criticism for both the cap on social care costs and how the government plans to pay for it, said he was only trying to "protect" people's inheritance. "The worst thing that can happen at the most vulnerable moment in your life, you lose the thing that you worked hard for, that you saved for, your own house," Hunt told the BBC's Andrew Marr Show.