Scrap 'spectre' of inheritance tax, Tory MPs urge

Politicians including former chancellor Nadhim Zahawi, have urged Prime Minister Rishi Sunak and Chancellor Jeremy Hunt to scrap the tax, according to The Telegraph.

Leading the charge of Tories calling for the tax to be eradicated is Mr Zahawi, the multi-millionaire former businessman who was sacked as Conservative Party chairman amid controversy over his own tax affairs.

He described the tax as a “spectre that haunts us alongside death” and said it was “morally wrong” to take someone’s assets on their death.

The Telegraph reported that the Conservative Growth Group of 55 MPs, formed by allies of brief former prime minister Liz Truss, will publish a paper on the issue as part of a campaign this month to convince the Treasury to abolish inheritance tax when it puts forward the Autumn Statement later this year.

However the calls to abolish inheritance tax (IHT) have been met with scepticism from senior economists and tax experts.

But Paul Johnson, head of the independent economic think tank the Institute for Fiscal Studies, said the tax should instead be overhauled, as it tends to be easier to avoid for the very rich with broadly-based wealth than for those with only one asset.

He tweeted: “Rather than scrapping IHT we urgently need to reform it. It is genuinely unfair.

Inheritance tax is paid when a person’s estate is worth more than £325,000 when they die, and they do not leave everything above the threshold to their spouse, civil partner, a charity or a community amateur sports club.

Very few people actually pay the tax due to the high threshold and exemptions.

The Treasury said the 40 per cent levy, applied to the part of the estate above the Government-set threshold, raises more than £7 billion a year to help fund public services.

Dan Neidle, the founder of the Tax Policy Associates think tank, noted that abolishing it would mean losing that tax revenue “to benefit the wealthiest 4%”.