Amid reports Chancellor George Osborne wants to raise the threshold on the tax before the next election to make sure it only hits the rich, Mr Cameron told MPs they “may have to wait some time for it”.
Conservative sources have suggested the policy is one of a raft of measures aimed at winning over voters who might be tempted to support Ukip in next year’s general election. Mr Cameron yesterday did not rule out cutting inheritance tax by raising the threshold above its current £650,000.
Inheritance tax is levied at 40 per cent on estates above £325,000 – with married couples able to combine allowances to £650,000. The Tories had vowed to raise the threshold to £1 million, but it was not in the coalition agreement with the Liberal Democrats when they took office in 2010.
Mr Cameron’s comments at Prime Minister’s Questions came as Tory Angie Bray, MP for Ealing Central and Acton, asked if he agreed on inheritance reform as soon as possible. He replied: “I think it was a step forward when the threshold was effectively increased by allowing the passing of things between husband and wife which makes it £650,000 and that only happened because of the pressure from the Conservative Party.”
He added: “Taxes, as they say, are a matter for the Chancellor in his Budget but we all want to see a system over time, and this may have to wait some time, but we all want to see a system where it’s only the very rich that pay inheritance tax and not hard-working people.”
Chris Leslie, Labour’s shadow chief secretary to the Treasury, said: “There’s already a £7 billion black hole in Tory spending plans. Now David Cameron has been forced into another panicky promise of pie-in-the-sky tax cuts with no idea about how they will be paid for. The only concrete tax pledge from the Tories is to cut the tax credits of millions of working people on modest incomes, while keeping a big tax cut for millionaires.
“Cameron failed to deliver on his 2010 manifesto promise on inheritance tax and raised VAT after saying he had no plans to do so.”