Chancellor reveals he is considering scrapping inheritance tax in huge handout to wealthiest Britons

Hint dropped at event hosted by the Taxpayers' Alliance - which has long campaigned for the levy to be axed

Rob Merrick
Deputy Political Editor
Tuesday 01 October 2019 19:59
Chancellor Sajid Javid not worried despite shrinking economy

Sajid Javid has revealed he is considering scrapping inheritance tax in what would be a huge handout to some of the wealthiest people in Britain.

“It’s something that’s on my mind,” the chancellor told a fringe meeting at the Conservative Party conference, agreeing with a questioner who branded it the “most hated tax”.

Mr Javid said: “I shouldn’t say too much now, but I understand the arguments against that tax.

“I do think that when people have paid taxes already, through work or through investments and capital gains and other taxes, there is a real issue with then asking them, on that income, to pay taxes all over again.

“Sensible changes have already been made, but it’s something that’s on my mind.”

Scrapping the tax would be hugely expensive – it raised £5.3bn for the Treasury last year – at a time when the government is promising to spend many billions more on public services.

But it would benefit only the richest 5 per cent of families which pay it, fewer than 25,000 estates across the country each year.

Strikingly, Mr Javid dropped the hint just hours after refusing to confirm the four-year-long freeze on benefits – blamed for a recent sharp rise in child poverty – would be lifted next year.

It may also be seen as further evidence of a determination to keep step with Nigel Farage, after his Brexit Party made scrapping inheritance tax a top priority in the summer.

The tax is paid on the property, money and possessions of someone who has died with an estate valued at £325,000 or more.

However, it is not charged if anything above this threshold is left to a husband or wife, civil partner, charity, or a community amateur sports club.

Nevertheless, criticism has grown because the threshold has been frozen for a decade and because rising property prices means more people have been caught.

In January last year, then-chancellor Philip Hammond asked the independent Office of Tax Simplification to carry out a review, but only into the working of the tax – not to consider whether it should be abolished.

Earlier this month, the independent Resolution Foundation warned that scrapping the tax would hand “an average of £179,000” to each benefiting estate.

“And even that average hides the scale of the giveaway to the super-rich,” wrote Torsten Bell, its director.

“If we’d abolished inheritance tax in 2015-16, 70 per cent of the benefit would have gone to those with estates of over £1m, and a huge 40 per cent to just 528 estates worth over £2m.

“That’s 528 people getting an average tax cut of just over £1m each, at a time when child poverty is rising.”

A Labour Party spokesperson said: “Javid is showing the Tories’ true colours. On the day that homeless deaths reach a record high, they’re more interested in talking about a massive handout to the country’s richest elites than reversing austerity.”

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