Covid-19: Death Duties and Inheritance Tax
Debate between Baroness Penn and Lord Truscott
Lord Truscott
To ask Her Majesty’s Government what plans they have, if any, (1) to reintroduce death duties, or (2) to increase inheritance tax, to help pay for costs associated with the Covid-19 pandemic.
Baroness Penn (Con)
My Lords, as announced at the Budget, rather than rising with inflation, the inheritance tax nil rate band and residence nil rate band will remain at £325,000 and £175,000 respectively until April 2026. Maintaining these thresholds at 2020-21 levels is forecast to raise almost £1 billion over the next five years. Alongside other announcements at the Budget, this will help rebuild public finances and allow the Government to invest in public services.
Lord Truscott (Non-Afl)
I thank the Minister for that reply but let us call a spade a spade: we are talking about death duties here, a tax on a deceased person’s estate. Would the Minister not agree that instead of facing yet another wealth or property tax, most people, especially those that are asset rich and cash poor, would prefer to pay tax after they pass away, hence the increasing popularity of equity release? A post-war level of death duties would raise £174 billion. Does the Minister also agree that this is the way to help pay for Covid and prevent a growing generational and societal inequality?
Baroness Penn (Con)
My Lords, as I have set out, maintaining thresholds at their current levels will make a contribution towards repairing the public finances following Covid. However, in order to do that job, we will need to take a broader-based approach, and that is what the Government did at the last Budget, including through freezing personal tax allowances and raising corporation tax.