Row Rages Over Tory IHT Proposals

by Jason Gorringe, for LawAndTax-News.com, London

20 August 2007

Wealth management firm, Towry Law on Friday came out in support of the proposal to abolish inheritance tax recently put forward by the UK Conservative Party's economic review group, headed by former Cabinet minister John Redwood and Simon Wolfson, the chief executive of retail group Next.

In addition to proposing deep corporate tax cuts, the review group called for an overhaul of the capital gains tax system, which would see the tax abolished on assets held for longer than ten years.

This would also apply to inheritance tax, thus dramatically reducing the scope of the levy. Furthermore, Redwood and Wolfson said that a future Tory government should take "early action" to abolish or reduce stamp duty on both shares and house purchases, although the report published by the review group last week conceded that there may be little fiscal leeway to bring about many cuts in the first few years of a new government.

Commenting on the proposed measures last week, Towry Law Patrick Connolly, Certified Financial Planner, at Towry Law stated that:

“We are in agreement with any sensible proposals to abolish inheritance tax. The current inheritance tax system is overly complicated, and the Government has manipulated the rules so that more and more people are caught in the inheritance tax net. Unfortunately it tends to be those that own a property or have managed to build assets through their lifetime, usually through hard work, that are penalised, while the super-rich, who in theory should be paying more, manage to escape the net."

“This is an unfair tax that, unless radical change is made, will continue to hit more and more ‘average’ people. These people, quite frankly, pay enough tax anyway.”

Although Shadow Chancellor, George Osborne has been less than forthcoming with regard to Redwood's tax cutting proposals, he has reportedly committed to an IHT cut under a Convservative government.

Labour, meanwhile, has condemned the Tory review group's proposals, arguing that they would need to be paid for by massive increases in green taxes. However, its estimate that the Conservative package would cost GBP 21 billion has been slammed as inaccurate.

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