Labour’s proposal to increase inheritance tax would affect an additional 1.2 million families with expensive homes, it was claimed last night.
John McDonnell, the shadow chancellor, confirmed last month that a Labour government would reverse Conservative “giveaways” on the tax.
Reforms implemented by the government in April raised to £850,000 the threshold for a couple to leave their family home to their children free of tax, with further increases taking the figure up to £1 million by 2020.
Labour plans to reverse the changes, which would return the tax-free threshold to £650,000. Inheritance tax is charged at 40 per cent on whatever people pass on to their children above the threshold.
The hardest hit would be families with homes in London and the southeast of England, where property is more expensive.
Advertisement
An analysis released by the Conservatives yesterday calculated that an additional 1.2 million homes could be liable for the tax under the Labour pledge. While 725,000 homes would be hit under the current Tory plans, the figure doubles to almost two million by 2021 under Labour’s proposal. Gavin Barwell, the housing minister, said: “Millions of families who have worked hard and saved all their lives will see their homes dragged into Jeremy Corbyn’s punishing tax.”
Research by Savills, the estate agent, found that the move would drag more than 48,000 London homes owned by the over-65s back into the inheritance tax bracket.
A Labour party spokesman said: “Reversing the Conservatives’ 2015 inheritance tax give-away, which only benefits 4 per cent of estates, will help fund our plans to transform Britain for the many not the few, including an additional £8 billion for social care, which is in crisis after £4.6 billion of cuts by the Conservatives.”