Downing Street is reportedly engaged in discussions about the potential scrapping of inheritance tax as a key offering in their manifesto to secure victory in the next election, according to reports. The Times revealed that No 10 was considering making the abolition of the levy a commitment to consolidate support in “blue wall” seats in 2025.
Supporters of the proposed policy argue that it could be a significant game-changer in the south of England, where the Conservative Party is defending vulnerable constituencies against potential gains by opposition parties.
Rishi Sunak has set halving inflation by the end of the year as one of his five key ambitions for leadership, and Jeremy Hunt has indicated that this target will take precedence over tax cuts.
The economic challenges faced by the Chancellor and Prime Minister were underscored by official figures indicating that the UK economy contracted in May.
Although the Conservative Party continues to trail behind Labour in the polls, The Times reported that the abolition of inheritance tax was being considered as a future manifesto pledge rather than an immediate policy to be implemented next year.
“It’s about being an aspirational country. You work hard, play hard, and pass on your wealth. It’s a live discussion,” commented a source familiar with the discussions.
Currently, the rate of inheritance tax stands at 40% for estates worth more than £325,000, applied only to the portion exceeding the threshold. However, estates of spouses and civil partners can pass on up to £1 million without incurring any inheritance tax liability.
Abolishing inheritance tax could potentially cost the Treasury £7 billion per year, contingent on a significant decrease in that figure, as reported by The Times.
A source from No 10 stated, “The PM has repeatedly expressed his desire to reduce taxes for the public. As Conservatives, it is evident that we want people to keep more of their own money. However, given the current economic situation, the government is fully focused on halving inflation to help individuals have more disposable income each month. Speculation on future scenarios is not the priority at this moment and requires a different economic environment from the one we are currently operating in.”
While the discussions are ongoing, it remains to be seen whether the potential abolition of inheritance tax will materialise as a manifesto pledge and how it might impact the Conservative Party’s electoral prospects in the future.
