Downing Street has pushed back against renewed speculation that ministers are thinking about scrapping inheritance tax in the spring budget, with a No 10 source saying the idea was “just speculation”.
The plan, one sought by a number of Conservative MPs, was being considered by Rishi Sunak as part of a wider “gear change” on tax in the budget, the Telegraph reported.
However, the No 10 source said it was speculation, and not an idea being pushed by Downing Street.
Asked about scrapping inheritance tax, Sunak’s deputy spokesperson declined to comment except to emphasise that fewer than 4% of estates paid the tax. “On inheritance tax more broadly, the vast majority of estates do not pay inheritance tax, and the tax is forecast to contribute almost £10bn a year by 2028-29 to help fund public services that millions of us rely on,” she said.
Senior figures in No 10 were said to have been considering the tax cut in September, before the autumn statement, but were warned of a backlash from “red wall” Tory MPs over focusing on tax cuts for the rich rather than helping ordinary families with the cost of living.
According to the Institute for Fiscal Studies, the wealthiest 1% of individuals in the UK would receive almost half of the benefit of ditching inheritance tax.
It would, however, create a point of difference with Labour. The shadow chancellor, Rachel Reeves, has not explicitly committed to reversing an inheritance tax cut if Labour won power.
Separately, the Tories are also aiming to woo young voters with promises to cut the upfront cost of a home for first-time buyers.
The housing secretary, Michael Gove, told the Times: “We have been asking the question: how can we ensure that people with decent incomes who are finding it difficult because of the scale of deposit required can get on to the housing ladder?”
First-time buyers could be offered government support for long fixed-term mortgages to reduce the cost of a deposit, or a fresh version of the help to buy scheme, which was launched in 2013, could be created.
Housing will be one of the key battlegrounds before the election, expected next autumn. Sunak failed to mention it once in his speech at the Tory party conference in Manchester.
Labour’s deputy leader, Angela Rayner, said at her party’s annual conference that Labour would oversee the biggest boost in affordable housing in a generation by getting tough on developers and reforming planning rules.
The deputy leader and shadow housing secretary said she wanted to “increase, not decrease” the number of affordable new homes built every year, after it fell 12% last year.
The Conservatives’ overall national housing target of 300,000 a year – which they have failed to hit – should be the “benchmark” of what a Labour government would deliver, Rayner said, adding that she wanted to exceed that number.
The number of first-time buyers in the UK has fallen by more than a fifth, while homes in need of renovation are most in demand as buyers look for cheaper properties, in the latest evidence that people are struggling with higher mortgage costs.
The average age of a UK first-time buyer stands at 32, raising the prospect of large numbers of homeowners not achieving mortgage-free status until they are in their 70s.
A senior Tory campaign strategist told the Times a “big offering on housing” was needed if the party was to have any chance of winning round younger voters.
Some Conservative MPs have already expressed their distaste for an inheritance tax cut now. The former education minister Jonathan Gullis said he would rather see the “the higher rate income tax threshold raised, or the basic rate of income tax cut now”.
The former health minister Neil O’Brien said “people most want to cut taxes that fall on low- to middle-earners and council tax and VAT”, while pointing to an Ipsos poll that showed the public preference for a tax cut was one on low income tax (44%), followed by 36% hoping for council tax cuts.
