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Friday, May 24, 2024
Friday May 24, 2024
Friday May 24, 2024

Outcry as Rishi Sunak contemplates scrapping inheritance tax for millionaires

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Public outrage over alleged attempt to pacify backbenchers with millionaire-focused tax cut

In a move generating public outcry, Chancellor Rishi Sunak is under fire for purportedly considering the elimination of inheritance tax for the wealthiest families. The controversial tax cut, labeled “obscene” by critics, has been characterized as an attempt to secure political support and address Tory challenges.

The Prime Minister’s potential decision to scrap inheritance tax has triggered skepticism, even among his own MPs, who advocate for tax cuts benefiting middle-income earners. Labour has strongly condemned the move, denouncing it as a desperate strategy from a beleaguered Prime Minister.

The government’s announcement of an earlier Budget date on March 6, 2024, has fueled speculation about a potential Spring election. The anticipated measures, including the reported cut to inheritance tax, have stirred controversy, given the significant revenue the tax generates for the Treasury.

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Inheritance tax, set at 40%, applies to estates exceeding £325,000, rising to £500,000 when passing a home to a child or grandchild. Government statistics indicate that only 3.7% of deaths in 2020-21 incurred inheritance tax.

Paul Nowak, TUC Head, expressed concerns about the proposed tax cut, emphasizing the potential impact on essential services. He argued, “It would be obscene to give a huge tax cut to a very small, very wealthy minority,” highlighting the need for funding in crucial sectors like education and healthcare.

Labour’s response characterized the reports as a “desperate briefing from a desperate Prime Minister,” asserting that the Tories cannot repair the economic damage they’ve caused. Internal criticism from Conservative MPs, including former minister Neil O’Brien, emphasizes the public’s preference for tax cuts benefiting low to middle earners.

Chancellor Jeremy Hunt, previously contemplating a 40% tax rate cut in his Autumn Statement, faced criticism for opting for a 2p cut to national insurance rates instead. The renewed focus on scrapping inheritance tax in the upcoming Spring Budget has reignited debates on tax policies and the government’s economic direction.

Ending inheritance tax would create a notable policy distinction with Labour, which is unlikely to adopt such a measure. The Institute for Fiscal Studies estimates the cost of abolishing inheritance tax at £7 billion, rising to almost £10 billion in 2028/29.

As the political landscape evolves and public sentiment intensifies, the government faces challenges in balancing fiscal strategies and public expectations.

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