Labour is considering a raid on inheritance tax to “redistribute” wealth if it comes to power, a shadow MP has claimed in an audio recording.
Darren Jones, shadow chief secretary at the Exchequer, told a public meeting that he expected there would be a “political consensus” that inheritance tax should be used to tackle “generational inequality”.
The decision comes at the end of an election campaign in which tax was a key battleground, with the Conservatives claiming households would pay more than £2,000 extra under Labour rule.
Labour has consistently ruled out increases to inheritance tax, capital gains tax or council tax, saying it would not introduce income tax, VAT or National Insurance levy if it wins Thursday’s election.
On the record, Mr Jones says there is “a lot of inherited wealth that has been drained out of the system” and that is why Labour wants to continue to tax people’s property.
On the final day of campaigning on Wednesday, Rishi Sunak is expected to make a final push to win over undecided voters by warning that Labour will impose taxes on their homes, pensions and cars.
Labour will repeat the mistakes of the Blair era and “spin out of control” on the benefits bill, Work and Pensions Secretary Mel Stride told The Telegraph.
The Prime Minister held a campaign rally in London late on Tuesday night and will then embark on a nationwide tour on Wednesday.
The latest polls show the Conservatives narrowing their lead over Labour slightly to 19 points, but this would still result in a big loss for them, with Labour heading for a large majority in the House of Commons.
The Conservatives claimed Mr Jones’ comments “revealed things” about Labour’s plans to impose a tax on family homes, but Labour said it was “complete nonsense” to suggest the comments signalled tax increases.
The number of properties subject to inheritance tax is expected to increase by 50% in the next five years, as the thresholds for paying the tax are frozen and house prices continue to rise.
If Labour wins the election, Mr Jones will become No 2 at the Treasury and Sir Keir Starmer will give him the same role in government, giving him a direct say on taxation.
The Telegraph newspaper previously reported that at the same meeting Labour said green energy plans would cost hundreds of billions of pounds.
He told a public meeting at a village hall in Bristol in March: “We had a bit of a discussion [on inheritance tax] In Westminster, this situation was eliminated because they tried to eliminate it.
“We said in Parliament that this was not right, because a large amount of inherited wealth in our country would enter the system largely on the back of housing asset values.
“And while we don’t think capital gains on primary residences is the right answer, we think it’s important that the inheritance tax regime — even though some people say it’s unfair because it’s double taxation — remains at the point of generational inequality because it allows you to get some of that value back and redistribute it across generations.
“It’s not a clear-cut solution, but that’s where the political consensus probably needs to be. On the inheritance tax, you could say you should think of inheritance tax as a way of redistributing money.”
Inheritance tax is currently levied at 40% on the value of properties over £325,000. It has been described as the most hated tax in Britain because the money used to buy a family home is already taxed through income tax.
The Conservatives are considering scrapping the tax altogether but Labour is not prepared to give up the £9.7bn it is expected to generate annually by 2028/29.
Currently, around four per cent of inheritances are subject to IHT, but by the end of the next five-year term of Parliament this is expected to rise to 6 per cent as the £325,000 threshold is frozen until 2028, pushing more and more people into death tax.
Laura Trott, Chief Secretary to the Treasury, said: “While Labour campaigned on a ‘nothing to see here’ policy platform, they were telling reporters off the record that they were planning a raft of new taxes if elected. We now know where they plan to tax first. People’s family homes – the bedrock of most families’ financial security.”
“That’s what Starmer’s super majority is all about – hard work and tax increases at will. If you want to stop Starmer’s super majority, the only way is to vote Conservative on Thursday.”
A Labour spokesman said: “This is complete nonsense. There is nothing in our plans that would require raising additional tax. We have set out fully costed, fully funded plans and have identified very specific tax loopholes that we will close. We have said very clearly that our interest is not in raising taxes – our priorities are economic growth and making working people better off.
“Promising £71 billion in unfunded election promises, embarrassing the country and our veterans on D-Day and lying through their teeth to cling to power. Who would expect anything better from a Conservative Party where it is impossible to point to a single success after 14 chaotic years?”
