Labour is considering an inheritance tax raid to “redistribute” wealth if it gets into power, a leaked recording of a shadow frontbencher suggests.
Darren Jones, the shadow chief secretary to the Treasury, told a public meeting that he expected the “political consensus” to be that inheritance tax should be used to address “inter-generational inequality”.
It comes at the end of an election campaign in which tax has been the key battleground, with the Tories claiming that households will pay more than £2,000 extra under Labour.
Labour has consistently refused to rule out increases to inheritance tax, capital gains tax or council tax, having said the party will not put up income tax, VAT or National Insurance if it wins Thursday’s election.
In the recording, Mr Jones says there is a “bulk coming through the system of huge amounts of inherited wealth”, which is why Labour wants to continue taxing people’s estates.
On the final day of campaigning on Wednesday, Rishi Sunak is expected to launch a last-ditch attempt to win over swing voters with warnings that Labour will tax their homes, pensions and cars.
In an interview with The Telegraph, Mel Stride, the Work and Pensions Secretary, said Labour would also repeat the mistakes of the Blair era and send the benefits bill “spiralling out of control”.
The Prime Minister was holding a campaign rally in London late on Tuesday night, to be followed by a tour of the country on Wednesday.
The latest poll suggests the Tories have narrowed the gap on Labour slightly to 19 points, but that would still translate into major losses for them, with Labour heading for a huge majority in the Commons.
The Conservatives claimed Mr Jones’s comments had “let the cat out of the bag” on Labour’s plans to tax family homes, but Labour said it was “total nonsense” to suggest the comments pointed to tax rises.
The number of estates subject to inheritance tax is projected to increase by 50 per cent in the next five years, as the thresholds at which the tax is payable have been frozen while house prices continue to rise.
Mr Jones will be No 2 at the Treasury if Labour wins the election and Sir Keir Starmer gives him the same brief in government. This would give him a direct say on taxation.
The Telegraph has previously reported that, at the same meeting, he was recorded saying that Labour’s green energy plans would cost hundreds of billions of pounds.
At the public meeting, held at a village hall in Bristol in March, he said: “We’ve had a bit of a debate [on inheritance tax] in Westminster because there were some plans to abolish it.
“We said on our side of the House we didn’t think that was the right thing to do, because there was going to be this kind of bulk coming through the system of huge amounts of inherited wealth in our country, largely off the back of housing asset values.
“And whilst we think the capital gains on primary residences is not the right answer, we do think the inheritance tax regime – even though some people say it’s unfair because they say it’s a double taxation – for the inter-generational inequality point we think it’s important that inheritance tax remains because it does allow you to get some of that value back in, to be able to redistribute across generations.
“It’s not a silver bullet, but I think it’s probably where the political consensus is going to have to be. You could say that on inheritance tax, you need to think of the inheritance tax as a way to redistribute money through.”
Inheritance tax is currently charged at 40 per cent on the value of estates above £325,000. It has been described as the most hated tax in Britain because the money used to buy a family home has already been taxed through income tax.
The Conservatives have considered abolishing the tax altogether, but Labour is not prepared to forfeit the £9.7 billion a year it is forecast to bring in by 2028/29.
At the moment, around four per cent of estates are subject to IHT, but by the end of the next Parliament in five years that is projected to increase to six per cent as the £325,000 threshold is frozen until 2028, dragging more and more people into death taxes.
Laura Trott, the Chief Secretary to the Treasury, said: “While Labour have been campaigning on a ‘nothing to see here’ policy platform, they have been telling journalists off the record they plan a whole raft of new taxes if they are elected. Now we know where they plan to tax first. People’s family homes – the cornerstone of most families’ financial security.
“This is what a Starmer super-majority means – tax rises on hard work and aspiration. If you want to stop the Starmer supermajority, the only way is to vote Conservative on Thursday.”
A Labour spokesman said: “This is total nonsense. Nothing in our plans requires any additional tax to be increased. We have set out fully costed, fully funded plans, with very specific tax loopholes we would close. We have said very clearly that our interest isn’t in raising taxes – our priorities are economic growth and making working people better off.
“Promising £71 billion in unfunded election promises, embarrassing the country and our veterans at D-Day, and lying through their teeth to cling on to power. Who would have expected any better from a Conservative Party where, after 14 chaotic years, it’s impossible to point to a single achievement?”
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