Covid-19: Death Duties and Inheritance Tax

Lord Palmer of Childs Hill Excerpts

Thursday 24th June 2021 Lords Chamber

[Baroness Penn (Con)]

My Lords, as I have set out, the Government’s approach to inheritance tax at the most recent Budget was to freeze those thresholds, which will raise additional funding. The Government’s plans for social care will be set out later this year.

[Lord Palmer of Childs Hill (LD)]

My Lords, I feel the Minister’s reply and arithmetic are rather optimistic. The Office for Budget Responsibility repeatedly reported that the public finances were unsustainable, even before the pandemic resulted in a 24% increase in public sector net debt in the past two years. How do the Government intend to put the public finances on to a long-term sustainable path? What will that mean for taxes and public spending in the short, medium and long term? The Minister’s reply and the arithmetic used are not believed by the Office for Budget Responsibility.

[Baroness Penn (Con)]

My Lords, I am glad to hear the noble Lord’s support for fiscal responsibility and repairing the public finances. As I set out, a number of measures were taken at the Budget to do this. These included freezing the income tax personal allowance until April 2026; increasing the rate of corporation tax to 25% from April 2023; freezing the pensions lifetime allowance and annual exempt allowance; and measures to tackle tax avoidance, evasion and non-compliance, which will raise an additional £2.2 billion by 2025-26.