The Tory grandee said he does not “buy” the argument that the tax on inherited wealth is widely hated – telling the PM to focus on cutting income tax instead.
Sir Ian Duncan Smith, Sir Jacob Rees-Mogg and other senior Tories have urged him to get rid of inheritance tax in a bid boost the party’s polling fortunes ahead of the general election.
But Lord Lamont, chancellor under John Major between 1990 and 1993, said cutting it only benefits “a small number of people”, adding: “I don’t really buy the argument that it’s much hated by everyone.”
“The largest number of people should benefit from whatever is possible,” the Tory peer told The Telegraph. “My priority would be [raising] income tax thresholds. They affect the most people.”
Lord Lamont added: “I think you want to give some relief to people who have paid the price and have had to pay for some of the measures that were introduced during the [Covid] pandemic. I think the average person would like to see a little light at the end of the tunnel.”
Despite calls from the Tory right to scrap the “hated” inheritance tax, fewer than 4 per cent of estates in the UK pay the levy on inherited property, money and shares.
The respected Institute for Fiscal Studies says the wealthiest 1 per cent of people in Britain would receive 47 per cent of the benefit of scrapping it. Inheritance tax is forecast to provide almost £10bn a year for the public coffers by 2028-29.
A plan to abolish inheritance tax is being pondered as part of a “gear change” on tax, according to The Telegraph. But No 10 and Treasury sources have played down reports as speculation.
Some red-wall Tory MPs have also urged Mr Sunak to bring in tax cuts for people on lower incomes – rather than cut inheritance tax for the wealthiest – in March.
“We should concentrate on incomes and thresholds rather than inheritance tax. That produces more benefit for a greater number of people,” John Stevenson MP, head of the Northern Research Group, told the Daily Mail.
Former minister Neil O’Brien, Tory MP for Harborough, said Mr Hunt should offer “tax cuts for those at the bottom end to help with the cost of living, and tax cuts that boost productivity”.
However, many senior Tories are still pushing for the PM and chancellor to act on inheritance tax. Sir Jacob Rees-Mogg said inheritance tax was “a pernicious and bad tax, which ought to be scrapped”.
Former leader Sir Iain Duncan Smith said: “I would scrap it altogether. The political impact would be enormous.”
And Ranil Jayawardena, chair of Liz Truss’ group of allies, the Conservative Growth Group, said: “Time is running out and the government needs to be bold: it’s time to scrap inheritance tax.”