Inheritance tax row continues

Posted: 21 Aug 2006 14:33:47 GMT

A rift is emerging in the Labour Party following Stephen Byers' comments to the Sunday Telegraph that inheritance tax should be abolished.

Mr Byers, a close ally to Tony Blair, suggested that house price increases could see more households qualifying for the tax.

The former transport secretary stated that inheritance tax was "a penalty on hard work, thrift and enterprise".

However, Alistair Darling, the trade secretary regarded as a 'Brownite', refuted Mr Byers' claims.

"Inheritance tax brings in about £3 billion a year. If you get rid of it, it follows that some other tax has to go up or you have to cut some public spending, on health and education and so on," Mr Darling told BBC News 24.

He added: "Ninety per cent of estates don't pay it, it is paid by six per cent and I don't think this proposal really has much support across the political spectrum."

Inheritance tax currently applies to estates worth above £285,000 and charges tax on the excess above this threshold.

However Mr Byers' argument is that as house prices go up, more middle class households will come into this bracket.

The Conservative thinktank the Bow Group has tabled a report discussing a Land Value Tax (LVT) alternative to inheritance tax. However, this was widely criticised as costing the average homeowner even more in payouts.



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