Jeremy Hunt facing Tory backlash over stealth inheritance tax raid

Jeremy Hunt is facing a backlash from Tory MPs over his plans for a stealth inheritance tax raid on families.

The Chancellor is poised to freeze the threshold above which people must pay death duties for another two years.

He will announce the move in the Autumn Statement as part of moves to fill a £60 billion blackhole in the nation’s finances.

Inheritance tax receipts have more than doubled in just over a decade from £2.3 billion in 2009 to £6 billion last year.

That is because house prices have rocketed by 120 per cent during that time, while the threshold for total assets passed on has remained at £325,000.

The latest freeze will raise an extra £1 billion a year, analysis shows, and drag 10,000 more families into paying death duties.

'Not the time to pile on further misery'

Britain has the fifth highest inheritance tax rate in the world at 40 per cent, which is the same level as in the US.

Only Japan, South Korea, Germany and France make people hand over more to the state on the death of a relative.

Tory MPs warned Mr Hunt that it was the wrong time to be hiking taxes on households with the UK heading into a recession.

“Higher tax rates are a bad idea. We need to fight recession, back enterprise and promote wider ownership,” said Sir John Redwood.

“We need to attract capital, risk taking and investment, not tax it away,” added the former head of No 10 policy under Margaret Thatcher.

Sir Iain Duncan Smith, a former Tory leader, agreed that now was “clearly not the time to pile further misery” on hard-working families.

“I don’t believe he should be raising taxes just as we are going into a recession and with the highest tax base for 70 years,” he said.

“I'm generally against stealth taxes because they're stealth taxes. There's a moral argument for lower taxes," said David Davis, a former Brexit secretary.

"I can quite understand what Jeremy Hunt is trying to do, and I support lots of it, but I hope we don't go too far the other way and exacerbate the recession."

Individuals can currently leave £325,000 worth of assets to their loved ones tax free, while couples can pass on £650,000.

When he was chancellor, Mr Sunak agreed with Boris Johnson to freeze those thresholds until April 2026.

Mr Hunt will announce at next week’s Autumn Statement that is now being extended by a further two years until at least April 2028.

Spending cuts and tax rises looming

The Chancellor is poised to unveil £35 billion of spending cuts and £25 billion of tax rises in a bid to balance the nation’s finances.

Treasury sources have guided that the brunt of the new austerity measures will be targeted at those who have the broadest shoulders.

But there are grumblings amongst Tory backbenchers who fear that the twin squeeze on families risks making the economic downturn worse.

One senior MP said that the party could still turn things around before the next election but “if we have four quarters of a recession, we’re finished".

They suggested party unity could begin to fray again after the Autumn Statement, which is set to dismay low tax Conservatives.

Another top backbencher added that the “tough decisions” Mr Hunt will have to make are likely to further dent their party in the polls.

“If the opinion poll ratings in six months from now are showing Keir Starmer is still going to win there will be rumblings,” they said.