Labour could impose ‘double death tax’, Jeremy Hunt warns

Labour could bring in a “double death tax” by putting up inheritance tax and charging capital gains tax on assets passed on when people die, Jeremy Hunt has warned.

The Chancellor is on Monday set to unveil an “inheritance tax guarantee”, which means that the Conservatives will not increase the rate of death duty if they win the general election.

The party will also promise to ensure that capital gains tax (CGT) continues not to be charged on assets passed on when someone dies, avoiding a “double tax” on death.

The Tories will claim that Labour could remove the exemption, which means that an estate beneficiary does not have to pay tax on gains that accrued before they inherited the asset.

It comes after reports last week that Labour has drawn up plans for wealth tax rises worth up to £10 billion.

Speaking ahead of the announcement, Mr Hunt called on Labour to match the Tories’ promise and rule out any changes to death duties if Sir Keir Starmer enters No 10 on July 5.

Mr Hunt said: “We have repeatedly warned that Labour are going to raise your taxes. Now it has emerged Labour have prepared secret documents to line up an inheritance tax raid on families.

“If Labour refuse to rule this inheritance tax raid out – like they have other taxes – we will know for sure they are planning on it. This comes on top of the £2,094 of tax rises Keir Starmer is already planning to pay for the unfunded spending commitments in his tax-trap manifesto.”

He added: “It is clear Labour is not being straight with the British public about the extent of their tax rises. Labour could have a budget in a little over 10 weeks’ time. They need to guarantee that the only tax rises in that budget are those already outlined in their manifesto.”

The Conservatives will also pledge not to cut the threshold at which inheritance tax is paid, and to ensure that unused pension pots are not dragged into inheritance tax.

They will also promise to keep the seven-year period before death, before which an individual is able to transfer assets free of inheritance tax.

The Guardian on Friday reported that proposals are circulating within Labour to increase capital gains tax and reform inheritance tax to make it more difficult to pass on farmland without paying tax.

In contrast, the Conservatives have promised that farming estates and family businesses would remain exempt from inheritance tax by keeping agricultural and business relief.

It is understood that Labour Party insiders question the existence of the memo made reference to by The Guardian and were not provided with enough specific information by the newspaper to identify it.

However, a Labour spokesman did not explicitly rule out the possibility of the wealth tax rises.

But the Tories have warned that such changes to death duties could be on the table under Labour if the party is unable to rule them out.

Sir Keir has insisted throughout the election campaign that Labour will not raise taxes on “working people”, listing income tax, National Insurance and VAT.

Last week, the party also ruled out charging capital gains tax on the sale of family homes.

But Labour has so far not gone further despite the pressure from the Tories, only insisting it does not have any further “plans” for tax rises.

Bringing an end to the capital gains tax exemption upon death would raise about £900 million a year for the Treasury, and dragging unused pension pots into inheritance tax could raise about £1.5 billion annually, according to estimates.

The Tories have repeatedly sought to bring the issue of tax to the heart of the general election campaign, with much of the campaign material urging households to “start saving” if Labour gets into power.

A Labour spokesman said: “The Tory manifesto was shredded by the Chancellor last week, and this week they’re announcing new gimmicks that weren’t in it at all.

“Rishi Sunak and Jeremy Hunt are making it up as they go along because they have no record to stand by and no plan to fix their mess.

“Keir [Starmer] and Rachel [Reeves] have made clear that our priority is growing the economy, not increasing taxes.

“Labour has set out fully costed, fully funded plans, with very specific tax loopholes we would close. Nothing in our plans requires any additional tax to be increased.”