Inheritance tax cut: Tories signal rise in threshold to £1m next year

Guy Bentley
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David Cameron signals inheritance tax cut (Source: Getty)

David Cameron has hinted the Tories will stop anyone but the super rich paying inheritance tax sooner than had been expected.

The Prime Minister told a charity conference in London that people who did not fell "in any way mega-rich" were being hit by the tax.

The Tory pledge to raise the inheritance tax threshold was made at the Conservative party conference in 2007 and was widely credited with saving the party from an election they were likely to lose.

George Osborne could indicate a move towards the goal in his last budget before the election. The tax cut would benefit the public to the tune of £3bn.

The current inheritance tax threshold stands at £325,000 and rises to £650,000 for married couples and is levied at 40 per cent. It was scheduled to be frozen until 2018.

Cameron told an audience at the Age UK event:

"To me inheritance tax is a tax that should be paid by the very wealthy. I think you should be able to pass a family home on to your children rather than leave it to the taxman.

"I would like to see that go further because I think even at £650,000, particularly in some parts of the country, you see someone who has worked hard, they have put money into their house, they have done it up and they want to leave it to their children and they don’t feel that they are in any way the mega-rich, and they feel: ‘I should be able to do that without having 40 per cent of it knocked off.'"

Inheritance tax has become a major issue, with the number of households vulnerable to the tax set soar over the next five years thanks to rapidly rising house prices.

Figures released by the Office for National Statistics yesterday showed the average house price in London has now reached £514,00 and had climbed to £338,000 in the South East.

The inheritance tax pledge was in the Conservative 2010 manifesto but was abandoned in the coalition negotiations with the Lib Dems.

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