Liz Truss backs Telegraph campaign to abolish inheritance tax

Liz Truss has backed the Daily Telegraph’s campaign for Rishi Sunak to scrap inheritance tax.

A spokesman for the former prime minister said she would support the abolition of the duty, which she believes penalises those who “work hard to earn money”.

On Thursday, The Telegraph disclosed that the proportion of homes under threat from the levy has more than doubled since the Tories came to power.

Ms Truss joins more than 50 Tory MPs who consider the tax unfair because it punishes people who have paid tax on their income, saved money throughout their lives and want to help their children or grandchildren financially.

During the Tory leadership hustings last summer, Ms Truss made it clear she wanted to review inheritance tax.

She said at the event in Leeds: “Our tax system in Britain isn’t working, it is too complicated. What I would do is have a complete review of the tax system, I want to make it fair for families.

“I would also look at inheritance tax as part of that review. In my view, fairness is what we need to reward people to do the right thing, who work hard to earn money and who want to pass it on to their children.”

However, the short span of her 49-day premiership meant she was unable to see her ideas into fruition.  

The inheritance tax threshold has remained at £325,000 since 2010 and Jeremy Hunt, the Chancellor, has frozen it until 2028. Almost 40pc of homes sold in England and Wales last year were worth more than the basic allowance.

One of Britain’s leading economists said that the tax needs urgent reform. Paul Johnson, director of the Institute for Fiscal Studies think-tank, branded the system is “genuinely unfair”.

“If all you leave is the family house it’s hard to avoid. If you have millions it is absurdly easy to avoid,” he wrote on Twitter.

The Chancellor has also come under pressure from senior figures in other parties. The leader of Reform UK backed The Telegraph’s campaign, describing the tax as an “attack on the grieving”.

Richard Tice said: “Reform UK is the only party that would scrap inheritance tax.

“It is a tax on the already taxed, is an attack on the grieving, and fuels a tax avoidance industry. We fund this by cutting the vast wasteful government spending.”

Former Brexit Party leader Nigel Farage said: “This tax is wholly unfair and is not paid by the very rich. It needs to go and I am right behind the campaign.”

Meanwhile Dame Arlene Foster echoed former Chancellor Nadhim Zahawi, who described the death duty as “morally wrong” and warned that it is adding inflationary pressure to house prices.

The former First Minister of Northern Ireland said: “I agree with Nadhim that it is wrong to punish hard working people who have saved all their lives, paid their taxes only to be taxed again when they die. It is wrong and needs to be addressed by this Government.”

In 2007 George Osborne, the then shadow chancellor, pledged to raise the inheritance tax threshold to £1m, ensuring that only millionaires would pay the levy under the Tories.

The popular move was credited with deterring Gordon Brown from calling a snap election.

Telegraph readers overwhelmingly support calls to abolish the duty, a poll of 1,100 people showing that 92 per cent agree the 40 per cent rate should be scrapped.

Conservatives behind this newspaper’s campaign believe that Mr Sunak could provide a boost for the beleaguered party by scrapping the tax, with the Tories lagging behind Labour in the polls following May’s bruising local elections in which they lost more than 1,000 seats.

David Jones, a former Cabinet minister, said: “Inheritance tax is arguably the unfairest of taxes. It imposes a tax on assets that have usually been amassed from savings from taxed income. In other words, it is a double tax, and a Conservative Government should make it a priority to abolish it.”

Brendan Clarke-Smith, chairman of the Blue Collar Conservatives group of “Red Wall” Tories, said inheritance tax was “immoral” and urged Mr Sunak and Mr Hunt to abolish “death taxes”.

Inheritance tax is charged at 40 per cent on wealth over the £325,000 threshold. Individuals have an extra £175,000 allowance towards their main residence if it is passed to children or grandchildren, and spouses can share their allowances.

How has inheritance tax impacted you? Do you have a story for our campaign? Email money@telegraph.co.uk