Posts Tagged ‘inheritance tax cuts’

Labour’s manifesto launch went well but it’s tin ear on aspiration could prove costly

13/04/2015, 09:04:49 PM

by Samuel Dale

Labour’s manifesto launch went well. The focus on tackling the deficit was right and Ed Miliband’s performance was assured.

But on Tuesday it’s the turn of the Tories and how Labour responds to their retail offer will be critical to deciding the outcome of the election.

We already know one of the centre-pieces of the Tory prospectus: inheritance tax cuts were widely trailed across the media, over the weekend. And so far, Labour has seriously mishandled its response.

George Osborne first floated a £1m inheritance tax-free allowance in the autumn of 2007 when its popularity saw off the election that never was.

The latest plan removes family homes worth up to £1m from inheritance tax from 2017.

It comes hot on the heels of big cuts to inheritance taxes related to pensions and Isas.

The current inheritance tax rules offer a £325,000 individual allowance with an additional £325,000 transferable allowance from your husband or wife. In effect £625,000 can be passed tax free to a married couple’s children.

Labour has been keen to point out that only 4% of people will benefit from the changes. The IFS says “over 90%” of estates are unaffected.

The implication has been that only the rich will benefit and as such this can’t turn an election.

So why do the Tories think it is a big vote winner? The £1bn centre-piece of their manifesto.

Firstly, it gives a bottom-line financial incentive to the wealthy estates who will directly benefit. They are the better-off pensioners who vote in large numbers (and the Ukip vote the Tories desperately need back).

Secondly, and more importantly, it is about aspiration.

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