A big increase in the inheritance tax threshold – potentially to £1 million – will be a centrepiece policy plan in next year’s Conservative general election manifesto, David Cameron has indicated.
The Prime Minister argued that only the rich should pay the levy as he disclosed moves to revive a key Tory pledge from the last election, when the party promised to raise the rate to £1 million.
The threshold has now been frozen since 2009 and Conservative MPs have been pressing for a rise to reflect the jump in property values in recent years across much of the country.
It is currently fixed at £325,000 for individuals and £650,000 for couples, with 40 per cent tax levied on the value of estates above this level.
A promised increase in the threshold would be seen as a further pitch to the “grey vote” following last week’s Budget and would create a clear division with their Liberal Democrats, who opposed the move in negotiations over the Coalition’s programme, as well as with Labour.
Speaking at a meeting to promote the Budget, Mr Cameron said: “We put in our manifesto that we wanted to take it to £1 million. But we did not win an outright majority [and] the pledge did not make it into the Coalition Agreement.
“Would I like to go further in future? Yes I would. I believe in people being able to pass things down through the generations and on to our children, it builds a stronger society.”
He told a meeting of Saga members in East Sussex: “Inheritance Tax should only really be paid by the rich, it shouldn’t be paid by those people who have worked hard and saved and brought a family house.
“The ambition is still there, I would like to go further. It’s something we’ll have to address in our election manifesto”.
The Conservatives first unveiled their £1 million inheritance tax plan at their party conference in 2007 when it was widely seen as boosting their fortunes and deterring Gordon Brown from calling a general election.
Meanwhile, a Liberal Democrat source confirmed that the party remained opposed to increasing inheritance tax rates. He said: “We have other tax priorities, such as continuing to cut taxes for people on low and middle incomes.”
Mr Cameron also hinted that the Tories’ next manifesto would contain a promise to protect universal pensioner benefits such as winter fuel payments and free bus passes.
Both the Liberal Democrats and Labour have said they would remove winter fuel payments from the best-off pensioners. But the Prime Minister said: “People think you save lots of money by not giving these benefits to upper-rate, top-rate taxpayers. You save a tiny amount of money and you always introduce another complexity into the system.”
The Conservatives have been buoyed by polls suggesting they have closed the Labour lead since the Budget.