Recession ‘could impede Conservative inheritance tax policy’

Posted 13/07/2009

The economic downturn could force the Conservatives to scrap their pledge to raise the inheritance tax(IHT) threshold.

Two years ago, shadow chancellor George Osborne announced at the Conservative Party conference that if they win the next general election, the IHT limit will be increased to £1 million.

Mr Osborne’s announcement proved to be very popular with the electorate and is partly credited with reversing flagging poll ratings and discouraging Gordon Brown from pressing ahead with a snap election in late 2007.

However, the country has to go to the polls by June at the latest, and internal party sources have told the Daily Mail they believe the public finances can no longer accommodate such a policy.

One MP told the newspaper: “If we’ve got to make cuts in public spending it won’t help to spend £3billion a year on tax breaks early in the first term.”

This comes shortly after the Policy Exchange thinktank urged the Tories to abandon their IHT pledge.

Neil O’Brien, head of the body, said this would allow them to “level with the public” about the “truly horrific” situation they will inherit.