Rishi Sunak is weighing up a reduction to the 40 per cent inheritance tax rate, widely viewed as “Britain’s most hated tax”.
The British Prime Minister’s move is seen as another attempt to help boost the popularity of the Conservative Party, which is currently languishing in polls, before next year’s general election, following his carbon zero reversal on Wednesday, The Sunday Times reported.
That controversial U-turn has seen the Tories’ biggest donor refuse to back the party, with John Caudwell telling The Sunday Times that he was “beyond shocked” at the “madness” and might now back Labour.
Reducing and then abolishing the inheritance tax is part of a series of moves that the Conservatives hope will increase their electoral performance, as the party currently finds itself trailing the opposition Labour Party by more than 15 points in polls.
The inheritance tax rate of 40 per cent currently applies to estates worth more than £325,000, with an extra £175,000 allowance towards a main residence if it is passed to children or grandchildren.
With the Conservative Party conference beginning next Sunday, it is understood that Mr Sunak will announce a reduction of the 40 per cent rate in the March budget. Proposals will also be set out for abolishing the tax entirely in future years.
“This is the most hated tax in Britain, according to the polls,” a political source said. “It’s the most hated tax at every income. People also feel it is just wrong to tax people on income that has already been taxed and at a time when they are grieving.”
However, only a small number of people pay the tax, with government figures showing that just 4 per cent of estates in Britain are eligible.
However, Mr Sunak faces potential trouble after Mr Caudwell, who donated £500,000 ($612,000) to the Conservative Party before the 2019 general election, said there was “no chance whatsoever” of him backing the party after the Prime Minister pushed back the ban on the sale of new petrol and diesel cars by five years to 2035.
Mr Caudwell, who founded the mobile phone retailer Phones4U, told The Sunday Times: “If Rishi sticks to this, would I donate to the Conservative Party? Absolutely not. No chance whatsoever with the decisions they are making at the moment.”
He added that he would support any party that “will do the right thing for Britain”, which could potentially include Labour.