Inheritance Tax

Debate between Noah Law and Daisy Cooper

Wednesday 14th October 2026 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

It is good to see the shadow Chancellor open this debate, because after his conference speech I too was not sure whether he would be trusted to close it. The shadow Chancellor was not the only Conservative Front Bencher to deliver an interesting conference speech, as the Leader of the Opposition simultaneously told us that every spending commitment would be matched by a source of funding, but then proceeded to announce a string of unfunded pledges—[Interruption.] Oh we got the numbers. It is clear that “Keminomics”—[Interruption.] I think the official Opposition are slightly rattled, Madam Deputy Speaker. It is now clear that “Keminomics” is simply Trussonomics 2.0, and if Conservative Members get anywhere near the levers of power again, or if they choose to hand the keys to No. 10 to Reform UK, they will once again propel this country towards another crash in the public finances.

Let me turn to the substance of the motion. We Liberal Democrats agree that the inheritance tax system is not fair. Ordinary families can face an inheritance tax rate of 40%, while those inheriting estates worth tens of billions of pounds are often able to avoid paying their fair share through complex tax planning and accounting arrangements.

[Noah Law]

There are issues with the current administration of the tax, but those are more to do with the fact that many of the wealthiest are avoiding it. Does the hon. Lady agree that businesses are genuinely in a better place to receive tax planning advice, so while there are a lot of retorts about the difficulties of selling plant and machinery, for example, businesses are better placed than households to take on that tax planning?

[Daisy Cooper]

Households and businesses feel absolutely hammered by the tax burden at the moment. On the subject of this particular motion, I hope we can agree that there is a problem because the wealthiest people can avoid inheritance tax through various loopholes.

--- Later in debate ---

[Noah Law]

Does the hon. Lady really believe that the top 4% of households are being “hammered” by inheritance tax right now? I do not believe that is the case.

[Daisy Cooper]

The hon. Gentleman’s first question was broader and was asking about the capacity of businesses generally to pay for advance tax planning. Hopefully we can all agree that the tax code in this country is so complicated that unfortunately people must seek expert tax advice. Our tax system could be much simpler. The point that I was trying to make is that there are problems and loopholes with this particular tax. We have one of the highest headline rates of inheritance tax in the OECD, yet only 4% of estates end up paying it. The burden often falls on those who cannot take advantage of the loopholes and exemptions that are available to those with access to expensive tax advice.

We would reform inheritance tax to make it fairer, but let us be clear: a mini-Budget style approach to tax cuts is not the way to do it. There is a better alternative. If we want to help people who are being squeezed by the cost of living, the fairest and most effective approach is to cut income tax. We Liberal Democrats have done that before; when in power, we would do that again. In Government, we cut tax for millions of people, taking 3.4 million people out of income tax altogether. Today, we Liberal Democrats are committed to raising both the income tax personal allowance and the national insurance threshold to £15,000 over five years—[Interruption.] Conservative Members ask where we are going to find money for that—I will tell them.