Abolishing inheritance tax

Friday, 17 Aug 2007 09:55

Reducing regulation will encourage the UK economy to prosper, according to a report commissioned by the Conservatives.

The Economic Competitiveness Policy Group (ECPG), lead by Conservative cabinet minister John Redwood, proposed inheritance tax should be abolished as it unfairly penalises middle-income families.

The tax currently claims 40 per cent on inherited estates and assets in excess of £300,000. The government claims the tax only affects a small minority of people, although rising house prices have meant many more are now liable to pay.

It was originally introduced to prevent wealthy aristocratic families from handing down vast estates and sums of money. The treasury estimates the tax will generate £4 billion per year by 2008.

Questions have been raised about where this money will be found should the tax be scrapped, with Labour branding the plan as “a recipe for economic instability”.