Corbyn plots tax raid on parents’ gifts to children

JEREMY CORBYN is plotting a major tax raid on children helped on to the housing ladder by their parents and those who inherit even the lowes tvalue homes, The Sunday Telegraph can disclose.

A report commissioned by Labour proposes replacing the system of inheritance tax with a “lifetime gifts tax” levied on cash or homes given to individuals during the course of their lives.

The document, Land for the Many, claims that the plans would facilitate “the better sharing out” of “unearned windfalls”, by generating an extra £9billion per year for the Treasury.

The proposals are likely to prompt fears among parents that their children will be taxed on financial assistance given to them during their lifetimes, including financial help to buy a home.

While the current system allows parents to avoid inheritance tax if they have passed on gifts to their children more than seven years before their death, the plans drawn up for Labour would apply a new tax covering any cash and property above a “lifetime allowance” of £125,000.

Once an individual exceeds the threshold, any further gifts would be classified as income and taxed annually at income tax rates. As of March, the average UK house price was £226,798.

“The reforms to Inheritance Tax … are designed to allow for the better sharing out of the unearned windfalls arising out of the boom,” according to the report, edited by George Monbiot, the environmental campaigner.

“The higher land prices rise, the more inheritance and windfall gains overshadow the rewards of work,” it adds. “For 10 out of the last 20 years, the owner of an average house in London has reaped more in annual price growth than the average full-time UK worker earns in a year.”

Under the current system, parents who leave a home to their children can pass on £475,000 worth of property and other assets without triggering the 40 per cent inheritance tax charge. The threshold rises to £950,000 for married couples and civil partners.

The report, which has been published on Labour’s official website, states: “In the long term we recommend that inheritance tax should be abolished, and replaced with a lifetime gifts tax levied on the recipient.”

“The Resolution Foundation estimate that taxing gifts through the income tax system would raise £15billion in 2020-21, £9.2billion more than the inheritance tax system, and would do so more progressively,” it states.

Labour said it would consider the proposals as part of its policy development ahead of the next election.