The Labour Party is considering widening the scope of Inheritance Tax in a way likely to draw millions of homeowners in more prosperous parts of the country into the tax liability.
Reports in both the Evening Standard and the Sun newspapers on the 1st of July outlined comments by the party’s Shadow Chancellor John McDonnell in support of changes to the tax regime designed to create a “fairer system” for the redistribution of wealth.
The proposals would see the current allowance of £475,000 before Inheritance Tax slashed to just £125,000, not only to estates bequeathed on the owner’s death but also property gifted at any stage during their lives.
Hardest hit, of course, would be those homeowners with property worth between £250,000 and £1 million – and there are many parts of the country where this is likely to include the vast majority of homes currently on the market. In Wokingham, in Berkshire, for example, the Sun reported that this included 88% of all homes, while the Evening Standard estimated that some 2,771,905 properties in London (77% of the total) would fall into the same price range.
According to official figures, average house prices in the East of England, London, the South East, and the South East are all above £250,000.
Tory party spokesman have branded Labour’s plans as a “tax grab” likely to affect an estimated 10 million homeowners. According to statistics published by the Resolution Foundation, 52.8% of all households in the UK are owner-occupied (either owning outright or with the help of a mortgage) – that is to say 14.4 million households of an estimated 27.2 million.