Parents who want to give gifts to their children could see them hit by a new tax if Jeremy Corbyn reaches No10.
Hot on the heels of labour’s housing policy to raise taxes on family homes, Labour has been found to support new tax increases in their latest report, The Land of the Many.
Commissioned by the Labour Party and called “ground breaking” by their Shadow Cabinet Minister Jon Trickett, the report proposes to drastically increase inheritance tax by turning it into a ‘a lifetime gifts tax’. But what is Jeremy Corbyn’s “gifts tax”, and how will it affect you?
What are Labour’s Gift Tax Plans?
The new tax would be levied on gifts made by people above a lifetime allowance of £125,000. This would be part of their overall land policy to tax recipients of inheritance rather than the people giving away the gifts themselves.
In practice, this would mean that anyone trying to pass on a family home or business face a huge tax bill. Ordinary families across the country would be affected by this change, if brought about.
How Much will Labour’s Gift Tax Plan Cost?
Labour’s plan would effectively skyrocket inheritance tax by £9 billion, according to figures by think tank the Resolution Foundation.
According to the report on Labour’s website ‘The Resolution Foundation estimate that taxing gifts through the income tax system would raise £15 billion in 2020/21, £9.2 billion more than the current inheritance tax system, and would do so more progressively’
Who Will Be Affected?
Labour’s gift tax plan would target all gifts over £125,000. Once a gift you receive exceeds the threshold, any further gifts will be classified as income and taxed at annual income tax rates.
While the report suggests there might be “conditional exemptions” for commercial and agricultural property, it does not mention family homes. The average home price in Britain is worth over £226,000, almost twice that figure. This plan therefore can raise the tax burden of homeowners across Britain.
There are also no clear exemptions for private charity, as well as for inheritance.
Conservatives Keep Taxes Down.
In contrast to Labour’s tax plans the Conservatives have made sure that families who have worked hard and saved to buy a home can pass it on to the next generation. We have removed millions of family homes from inheritance tax by increasing the amount that a couple can pass on to £1million.
That’s why we’ve cut income tax for 32 million people meaning a typical basic rate taxpayer pays £1,205 less than in 2010. We’ve also increased the higher rate threshold, frozen fuel duty and abolished stamp duty for over 90 per cent of first-time buyers.
That’s because we believe in helping people keep more of the money they earn. By contrast, Jeremy Corbyn’s Labour has voted against cutting income tax twelve times in Parliament.
We’ve been able to do this at the same time as investing in our public services by keeping our economy strong. Labour would put this all at risk with their plans for higher taxes and more borrowing.
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