Darling trumps Tories on inheritance tax
Alistair Darling took on the Conservatives over inheritance tax today as he announced that the threshold for couples to would be doubled to 600,000 - with immediate effect.
The chancellor also used his first pre-budget report to pledge an extra 400m this year for the armed forces and a closing of the loopholes that allow private equity bosses to pay less tax than their cleaners.
But in a clear attempt to wrest the political initiative from the Tories, who last week pledged to exempt all but millionaires from inheritance tax, Mr Darling accused the shadow chancellor, George Osborne, of creating 2bn shortfall in the Conservatives’ spending plans.
Mr Osborne branded the statement a “desperate cynical stunt from a desperate and weak prime minister”.
Under Mr Darling’s proposals, the total amount of inheritance for married couples and civil partnerships on which no tax is paid will immediately rise to 600,000.
By 2010 the combined tax-free allowance for couples will rise to 700,000.
This will be backdated indefinitely for every widow or widower, and in future years, both house prices and inflation will be taken into account when setting thresholds.
His proposals came after the Tories promised at their annual conference last week to exempt estates under 1m from inheritance tax.
However, Mr Darling dismissed Tory plans to pay for the cut with a 25,000 flat rate charge on “non domiciled” wealthy foreigners - saying it would raise just 650m, not the 3.5bn that the Tories claimed.
But to opposition jeers of derision he said that he would be bringing forward his own measures to ensure that the “non-doms” were made to “pay their fair share”.
Mr Darling said that his inheritance tax proposals would mean that 97% of estates would be exempt while leaving him with an extra 2bn to invest in schools and hospitals.
Spending on the NHS in England would rise from 90bn this year to 110bn in 2010, Mr Darling said.
