According to the Daily Mail, Alistair Darling is planning to freeze the inheritance tax (IHT) threshold next year at this year's level. At present the single person's IHT threshold for example, set at Â£325,000 is due to rise to Â£350,000 next year. This is seen as a move to maintain the tax take so that Labour can promise to outspend the Conservatives in the run up to the next election.
According to the Mail this means that more families, not fewer, will therefore be liable for the tax.The Tories have already announced plans to raise the inheritance tax threshold to Â£1m for a single person and Â£2m for couples. but this was decried as being a rich persons' tax relief.
But now, with the parlous state of the UK finances, Labour have been forced to rethink their policy and the Tories may have to quickly follow suit.
Labour may even plan to freeze the threshold for many years to come.
In reality, with the recent falls in property prices, there will probably be fewer families that are caught in the inheritance tax bracket, not more. In fact I would say that some families will be trying to get the lowest valuation for probate they can and arguing that the market is still falling.
Generally the single largest asset within an estate is real estate property. So in fact, with falling property prices it could be argued that the inheritance tax threshold should be lowered just to keep the tax take at about its current level without 'capturing' more families in its grasp.
Doing this would of course be political suicide, so the Labour proposal of freezing the threshold is about the most radical anyone can get.
The ballooning government debt can only be repaid two ways. By the taxpayer eventually stumping up with more dosh, or by a fire-sale of government (our) assets. Freezing the IHT threshold may be the least of it.