LABOUR has been accused of planning a multi-billion “tax raid” on parents, who want to help their children get on the housing ladder.
A report commissioned by the party, entitled “Land for the Many,” proposes replacing inheritance tax with a so-called “lifetime gifts tax” on cash or homes that parents give to their children.
This would result in children paying income tax on everything their parents gave them over a value of £125,000; this is less than a third of the current inheritance tax threshold.
The report claims the move would facilitate a better distribution of “unearned windfalls,” generating an additional £9 billion a year for the Treasury.
It also contained a plan to replace council tax with a “progressive property tax,” which would target larger homes with gardens.
Neither is official party policy but simply forms part of Labour’s discussions in the run-up to the next General Election.
Nonetheless, any such shake-up would raise fears among parents that any help they give their children could be taxed and thus hinder their attempts to get on the housing ladder.
At present, parents can avoid inheritance tax if they have passed on gifts to their children more than seven years before their death.
When their parents die, children pay inheritance tax of 40 per cent above a threshold of £475,000; a sum that rises to £950,000 for married couples and civil partners.
However, under the plans drawn up for Labour, once a person exceeds the £125,000 threshold, then any further gifts would be classified as income and taxed annually at income tax rates.
When the report was published earlier this month, Jon Trickett for Labour said: “Concentration of land in the hands of a few has led to unwanted developments, unaffordable house prices, financial crises and environmental degradation. Labour is committed to tackling these head on and delivering a fundamental shift in wealth and power from the few to the many.”
But Paul Scully, Vice-Chairman of the Conservative Party, denounced the proposals as amounting to “yet another Labour tax raid in Corbyn's war on homeowners”.
He went on: “It would slash the inheritance tax threshold to £125,000, meaning the vast majority of homes would be hit by Corbyn's tax-grab.
“Only the Conservatives are committed to helping people achieve home ownership through our policies such as Help-to-Buy and cuts to stamp duty for first-time buyers.”
His Tory colleague, Priti Patel, the former Cabinet minister, added: “Corbyn's Labour have no respect for the millions of people across the country, who work hard to provide economic security for themselves and their families.
“Labour's disregard of people, their rights and freedoms is exactly why socialism never works and it will never work in Britain.”
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