Does anyone seriously believe that Alistair Darling would have made his announcement on Inheritance tax or on Non Domiciles if the Tories hadn't made hay with this last week? Of course not. It was a pre-election statement without the, er, election.
The announcement of a £600,000 allowance on Inheritance Tax for married couples is welcome, but it only goes half way. What about the wider family? Surely the main family home should be safe from inheritance tax so it can be passed down through the generations.
Anyway, for your enjoyment, here is what Labour has said about Inheritance Tax...
Gordon Brown on Inheritance Tax
'When a choice must be made about spending priorities in this country, it should not be in favour of tax cuts that are geared to the very wealthy, based on the abolition of inheritance tax and capital gains tax.'
(Gordon Brown, Hansard, Col. 990, 12 July 1995)
'If the Chancellor tries to abolish inheritance tax, or abolish capital gains tax, we will oppose that.'
(Gordon Brown, BBC R4, Today, 26 November 1996)
Stephen Timms – Gordon Brown’s former deputy at the Treasury
‘[Inheritance tax] is morally the right tax…. It is right to apply tax in that way and we will continue to do so.’
(Hansard, 15 June 2006, Cols. 894-5)
‘[Cutting inheritance tax] is not a high priority for most people. Most people want continuing investment in public services and, as it stands, inheritance tax is making an important contribution to that.’
(Hansard, 11 November 2004; Col. 923)
‘I think that the balance on inheritance tax is about right.’
(Hansard, 11 November 2004; Col. 923).
Alistair Darling
Responding to Alan Milburn’s recommendation to cut inheritance tax radically:
‘I don't think this proposal really has much support across the political spectrum.’
Alistair Darling, The Times, 21 August 2006
‘It may make for a headline, but I don't think it makes for a prudent and sensible tax and spend policy.'
Alistair Darling, The Times, 21 August 2006
'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.’
Alistair Darling, The Times, 21 August 2006
More from Dizzy & Jon Craig on the Sky News blog, who reckons Alistair Darling is 'banged to rights'.
45 comments:
The Tories are setting the policy agenda now. Labour can only respond, rebutt and writhe.
As soon as Osbourne announces a policy, they react.
I'm sorry, you want consistency from this government?
By the way, since Gordon's moment of clarity two more people have said to me that it's "time for a change" of government. I think we may have passed the tipping point and 2009 will be to New Labour what 1997 was to the Conservatives.
Thanks for all the policies. Much obliged.
I'm going to go off hiding somewhere.
Am polishing off my passport, and awaiting the return of some politicians with an IQ above room temperature who do not take us all for sheep, doormats or wallets. Oh, Alistair, thanks for giving a chunk of our hard earned to Northern Rock while you're at it...
Make mine a triple.
What an electrifing performance from George Osborne. He wiped the floor with Darling, who carried on where Brown left off: if in doubt, lie through your teeth.
This Government really are the lowest of the low however. I have never seen such a flagrantly political pre-budget speech. Brown and co really are running scared and are making economic policy, not for sound financial reasons, but solely to try to score points off the Tories.
All those quotes stand up...the Tories really don't get it do they? The chancellor has promised to raise the threshold to £700,000 in 2010, not abolish it or match the unfunded Tory plan to raise it to a million. As he quite clearly said, to raise it to £1m would exempt some of the wealthiest 1% from duties.
Osborne's plan will benefit families like his own & David & Samantha Cameron's- hugely wealthy land & business owners. If there is to be a rebalancing of the IHT system to make it 'fair', then exempting working families is right. Exempting rich Tory MPs is not.
And Osborne still has to answer how his other plans add up.
It's no use saying you can pay for tax credit increases by getting people off welfare, when even Cameron acknowledges it may take 5 years for any revenue to come through.
It's no use saying you will fund tax cuts by taxing non-domiciles when you claim that you can raise £3.5bn from the changes when the ONLY independent expert who agrees is an unnamed source in a Sunday newspaper.
And it's no use shouting in a pathetic pantomime manner "Where has all the money gone" when Osborne won't say if he will even match Labour spending on schools and hospitals.
I've got one for the Tories and their plans to cut taxes for the richest people in Britain: "WHERE IS ALL THE MONEY COMING FROM?"
Actually, as I have *ahem* pointed out many times, starting with Darling last August (when Byers was flying the IHT kite) the Broonite response has always been - it's irresponsible to propose unfunded tax cuts. Since that time they have ALWAYS kept their powder dry on IHT, leading me to predict they would make this move in the First 100 Days
and I Bet They Wish They Had ...
The BBC news is saying that there is an IHT cut for couples. Perhaps someone should tell them that married couples do not pay IHT between each other - they will simply be allowed to combine their allowances automatically on the death of the second one - something which is done by most effected people via some nifty drafting in their will.
Note - Byers, not Milburn (a pedant-historian writes)
vlad, you've had too many already! Did he announce a tax-payer gift to Northern Rock? Or was it an unused guarantee to stop the queus of "possibly goats" forming? I don't mean to be unpleasant about those queues, but I reckon half odf them thought they were queueing for Viagra.
not a sheep - two more , eh? Were they married to one another by any chance?
Personally I'd apply an IHT at the same proportion that Lady T applied it in 1985, when she introduced it. Anyone know the figures? Ratio to total tax take, not quantum.
I associate myself entirely with the wise words of anonymous of 4.35, and to the funny ones of ed and vienna woods, whenever they join the debate
You are far too cynical Iain. Even if Gordon Brown could be assured of a 100 seat majority if he had left IHT alone he still couldn't live with himself .He desperately wants to cut the taxes of hard working famillies.He told us that and I believe him.
PS I was born yesterday.
Since married couples rarely die together, i thought the married couples threshold applies to beneficiaries? My confusion leads me to join the ranks of the anonymous, in shame (felicitations to those who can guess?). Seems a recipe for more clever avoidance, anyway.
Anonymous at 4.35pm 9/10 said "Osborne's plan will benefit families like his own & David & Samantha Cameron's- hugely wealthy land & business owners"
Clearly you do not know much about inheritance tax as business property relief and agricultural relief both currently give 100% exemption from inheritance tax. The latter applies to landowners as well as working farmers. So wealthy land and business owners are already in the clear.
I see NuLabour's rebuttal units had their lengthy scripts pre-prepared.....
I wonder which way Gordon's moral compass is pointing today? On the evidence of this afternoon, directly at George Osborne - the man with the answers. Perhaps Brown should invite Osborne into his "Govt. of all the Talents".
I get it now , and so shed the cloak... thresholds haven't doubled, the rules have changed, that's all so that surviving spouses can add the £300k allowance of their dead spouse to their own allowance. Presumably serial widow(er)s will have their allowance augmented by £300k every time a spouse shuffles off.
It is not a tax cut at all and I think once people have had a look at this it could rebound badly on the government.
This morning each partner had an allowance of 300k. On the death of the first they could set up a nil rate band trust or execute a deed of variation on the deceased's estate. The effect of this was that the real rate for couples was 600k anyway.
More spin no substance- I hope this is picked up by the tories in time - Osborne missed it when he stood up.
Chris (m) - Are you really saying that the Iain Cameron & Sir Reginald Sheffield, as well as Osborne's family, really have no personal wealth? Their businesses & agricultural holdings (In Sam Cameron's case most of Lincolnshire)may be exempt, but their mansions and estates are not. And if they are, then it's no surprise that wealthy Tories are using avoidance techniques... sums up this 'modern' Conservative Party.
Ref the improved "£600k Inheritance tax threshold for married couples"
Perhaps I'm being thick, but what happens regarding a current widow, or widower, currently living in a £400k house ? If they die tomorrow, under Labour's announcement, their family will need to pay £40k in IHT. But under the Conservative plans, they would be able to pass on their entire home/estate IHT free. Is that right ?
If that is the case, it's yet another classic example of Gordon/Labour wanting the big headline (I'm increasing the IHT threshold from £300k to £600k !), but still shafting many (current widows & widowers who want to pass on their home IHT-free) in his small print.
Whadda guy !
Watching the Daily Politics earlier - first Labour spokesperson on the green following Darling's speech was Patricia Hewitt. They must be desperate.
Next up was Andy Burnham. Terrible performance, embarrassing even. Clearly unprepared to deal with the late changes to Darling's announcement. Kept saying things like "I may be corrected on this but what I think the Chancellor meant was..."
And he's the Chief Secretary to the Treasury? God help us.
So what's this then? A choice of £1 Million before IHT under the Conservatives or give the NuLab Goverment a bung of about £160,000 on the same money (but only if you're a married couple)?
Am I getting this wrong somewhere? Have I lost my marbles?
I need help...
I liveblogged the budget report over here. Darling raced ahead at some knots so I might not have gotten everything, but I think I managed to get the main points.
The IHT policy is another example of Labour Lies.
They promise a policy but the small print means there's almost no change. For right now couples can take advice and design a will to achieve exactly the same effect. In other words, Darling's announced a policy that exists already.
Sounds familiar but we're not being fooled anymore by the Labour Lies.
Anon 4.35
I suppose the anon can be taken to be some Labour hireling . Is this going to be their line then? We were going to make tax cuts but we just wanted to do it in away that made it infinitesimally more targeted at this or that group ...as if you could find it in the £647 billion they are burning next year. And the fair line ...is a magical place somewhere between £700 ,0000 and £1,000,000 neither of which were on the cards until the Conservatives announced it as is entirely obvious to anyone .
Well it’s the Brown show isn1t it . Complicate confuse and obscure ....hide the lies in detail. Been the same since the pension heist....I would be so ashamed if I had to say that sort of thing for a. living . I think the country has now seen him for what he is and the question is basically .....
Do they want another eight years of Bliar
Well do you
Punk ?
THIS IS NOT A TAX CUT.
On death of the first partner, every husband and wife can transfer £300k at the moment out to their kids tax free. And the rest to their remaining partner, tax free.
On death of the remaining partner, the IHT allowance of £300k is still there (e.g. for transfer to kids), tax free.
So the total tax-free amount available for any couple is already £600k. The only effect of this measure is on those couples who die at the same time as each other.
To quote from the Pre-Budget report:
"The inheritance tax (IHT) spouse relief rules mean that there is no IHT paid on assets
passing between married couples or civil partners. Many people therefore leave all their
assets to their spouse or civil partner, and do not make use of their individual tax-free
allowance of £300,000. The Government will therefore make the IHT system fairer by ensuring
that if a person’s tax-free allowance is not used on their death, it can be transferred to their
surviving spouse or civil partner, enabling every married couple or civil partnership to
benefit from double the tax-free allowance – £600,000 this year – in addition to spouse relief."
So there are no extra allowances. And given that this advice was even on the front page of the "your money" section of the telegraph this year, it's hardly a secret loophole...
Gazza, the 600000 is back dated for widows and widowers...
Darling's IHT announcement is not a tax cut for very many people. The Tory proposal was as it applied to individual estates. Under the Darling proposal all of us who are not married/in a civil partnership will continue to pay tax at 40% over the existing 300K threshold. Equally, many couples already have their wills drafted in such a way to achieve a 600k exemption. So, all in all, just more spin.Sure, there are questions about how the Tories were going to fund their IHT measure, but it was a genuine tax cut. A final thought. I just don't understand why their is not much more focus on pursuing a tax cutting agenda. Tax people less and governments earn more.
Before I start on your post I notice that Google is pushing you adverts for the Tory candidate in Hampstead and Kilburn. he has sadly been found out out Lib Demming the Lib Dems when it comes to bar chart abuse.
The Thunder Dragon deserves credit for helping expose that without fear or favour. I hope that you too will cover this scandal and show that you don't approve of Tories fibbing with bar charts.
Now that's done with this post is pretty shoddy. If you cannot understand the small print yourself you need to listen to or wait to read the words of those that do.
In my humble opinion.
Inheritance Tax was and still is not a real problem but it is a perceived problem. Stopping Two Billion short of the proposed Tory Giveaway to the very richest is an excellent way of restoring just a little clear blue water.
HINT: Capital Gains changes may be more of a change than these are.
Changing the subject slightly to tax on non-doms, this is from Tom Watson's blog last week after the £25,000 capped tax proposal
"The Tories are wrong about US tax law and this too puts at risk their claimed receipts. George Osborne said on the Today programme “in return for this £25,000 levy, this will simply reduce their US tax bill by £25,000 as well so they actually personally won’t be out of pocket”. This is wrong. The proposals say City workers from the US would receive a credit on their US tax for £25,000. Under US tax law, this could not happen because this is a flat rate annual levy, not income tax. The Tories acknowledge this but provide no answer to it. So the proposal would potentially drive some US citizens out of the City and further reduce any receipts this measure might raise."
If £25,000 was bad, then how is £30,000 better? I guess TW has about as little credibility as any MP could hope to have and still breathe.
Brown and Darling have only themselves to blame for most of the flak, consider the reluctance to adjust tax thresholds - Income Tax, IHT, and CGT over the last 10 years. All of this is great news for the accountants and purveyors of complex trusts.
Brown has made the tax system harder to understand. Look at Brown's much cherished Tax Credits system it has been under fire yet again. But instead the NuLab Trolls focus on IHT.
hold on. hasnt alaistair darling pulled a fast one.
the threshold has gone up to £600,000 per MARRIED COUPLE.
its NOT gone up to £600,000 PER PERSON.
and despite all the Labour protestations of "black holes" over a measly £3.5 billion in the Tories proposals, Darling proposes throwing away NINE BILLION to African dictators and their Swiss bank accounts under the guise of "foreign aid". thats NINE BILLION of YOUR money.
How generous of them.
"Tax people less and governments earn more."
agreed. just look at Ireland.
or flat tax Russia or Estonia where government revenue has boomed in the wake of flat tax being introduced.
with the coming credit crunch and slow down in the economy now more than ever do we need radical and deep tax cuts in order to stoke the economy. and yet we get nothing - this government is sleep walking UK Plc into recession.
Only beneficiaries of changes to IHT are widows/widowers and those who have not had time, perhaps due to accident or sudden death, to arrange affairs or those who have never thought it would apply to them. Anything is better than nothing but it bears no comparison with the simple clear Conservative position.
Osborne has missed a massive open goal. Darling has not increased the amount couples can pass on tax free by a single penny. Rather than bleating that Labour had stolen his clothes he ought to have pounced on this deceipt, and exposed the government for their fraudsters they are.
Darling's proposals for IHT are actually an incentive to murder. no seriously!
from the treasury
page 20 , point 5.76 of this pdf document
"The inheritance tax (IHT) spouse relief rules mean that there is no IHT paid on assets passing between married couples or civil partners. Many people therefore leave all their assets to their spouse or civil partner, and do not make use of their individual tax-free allowance of £300,000. The Government will therefore make the IHT system fairer by ensuring
that if a person’s tax-free allowance is not used on their death, it can be transferred to their surviving spouse or civil partner"
so, its not YOU as an individual deciding whether or not you want to pass your allowance on to your spouse. the government is going to do it and pass it on to your spouse.
cue the phenomenon of the serial spouse/husband murderer.
each murder is literally now worth 300k tax free- so you can build up quite a big tax free allowance over your lifetime.
i wouldnt be surprised if there is a tabloid-headline generating court case at some stage over this.
I hope the further hypocrisy is pointed out that when modest tax incentives for families were mooted the "same old Tories" punishing single parents etc etc comments came out quicker than you can say tax break.
Conservative proposals take relationships completely out of the IHT process, in fact the Labour "solution" is penalising many types of transfer (e.g between siblings), so expect the Toynbee's and BBC Journos of this world to say, er, exactly nothing.
Privatise the BBC and use the licence fee of £3.5 billion every year to invest in schools and hospitals.
Sorry Iain: 'Shouldn't the main marital home be exempt...so that it can be passed down the generations'
Is not the whole point of inheritance tax that wealth is NOT passed down the generations?
Either come out against it in principle, or discuss fairness issues surrounding cut-offs, dont argue for exemptions on the basis that it hinders the inheritance of wealth...
Gazza here again - ref reply by Anonymous of 6.27pm
Big thanks for your reply but I heard someone on radio suggesting you are not totally right...there's even more small print ! eg Jane's husband Bill died in 1999 and Bill left the full IHT allowance of the time to his & Jane's children. Apparently in this case there would be no 'retrospective treatment' to apply when the widow Jane dies. So if widow Jane dies next week, she will still only be able to leave £300k of her estate to heirs before she pays the 40% IHT.Because Bill used up all of his IHT allowance at the time of his death.
Maybe I'm wrong again, but in Jane's situation you would be much better off with the simple Tory plans (individual thresholds of £1million - simple and clear). Typical Gordon. Nick an idea but overcomplicate it with complex red tape and deceitful small print !
morning gazza. The point is that everyone has £300k allowance, and can't use it more than once. What Jane should do, if she's that keen on tax-effieciency is re-marry, then hope her new chap dies soon enough for her to jump through the loop/over the brush again.
If the IHT threshold hasn't changed, then why is it costing so much? Can it be because Darling has robbed the accountants of their fees, and rewarded those families who are not so clever?
What Darling is suggesting is not a tax cut but a tax simplification as my understanding is it means that couples should be able to utilise their nil rate allowances for IHT without having to use discretionary trusts or possibly split the ownership of the family home with the children on the death of the first spouse.
I think the real problem with the Conservative's proposals is that unless there are other changes to the existing IHT legislation a nil rate band of £1 million would make the whole inheritance tax regime unviable. This is because the surviving partner in most couples could probably very easily reduce his or her estate to £1 million or less by gifting the balance to the kids and then living seven years.
The choice is therefore to either abandon IHT altogether or remove the uplift of base costs for CGT on death or possibly limit the exemption on the transfer between spouses to say £1 million (it currently has no limit). Adding a limit to the exemption between spouses would then take away the major form of IHT avoidance used by couples on the first death.
At the end of the day I believe a truly conservative government should be thinking of ways to reduce income taxes on those with lower or middle incomes and not letting the usually middle aged and often well-heeled beneficiaries of estates get off scot free from IHT. The argument that these people are being taxed twice is nonsense because most people are in the IHT tax band because of house price inflation and for couples the allowance is effectively £600,000 anyway.
"I'm sorry, you want consistency from this government?"
Are you joking? They've been consistently Lying, Cheating, Spinning, Taking and Taxing for the last 10 years!
Zorro.
Chris(m) - If I haven't already said myself what you'd just written, I'm sure I will!
however, my question for you, and anyone reasonable, is this : Given that Osborne's idea led to an immediate improvement in Conservative poll rating, will there be more tax-cutting ideas to come from Osborne? And would this play well with the rather simpistic journalists who seem to be increasingly powerful. Lots of "lurching to the right" heaslines, etc.
Iain, I can't quite understand why any of the quotes that you have posted up contradict the government's actual policy...
You want consistency? From a NuLab Rat?
The only consistent thing you'll ever find them doing is desperately trying to cling on to power (and the loot that comes with it) for as long as possible.
Everything else is negotiable.
What is this 'family home' nonsense? I only know one family amongst hundreds of friends where adults with children live in the same house as their own parents. What percentage of people inheriting their parents' home don't already own a separate home of their own?
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