Shadow chancellor John McDonnell has admitted that Labour is considering raising the inheritance tax threshold should they get into power.
Currently, the inheritance tax threshold is £495,000 – or £950,000 for couples – with children paying 40 per cent of anything over this figure.
But this would be replaced with a ‘Lifetime Gifts Tax’ (LGT), which Labour have claimed could generate an extra £9.2 billion per year for the government.
which would see a child pay money on everything their parents gave them – in life or after death – which came to more than £125,000.
This would mean a family with two children would only be able to inherit a home with £250,000 tax free.
According to figures published in March, the average price of a home in the UK is £226,798.
Under current laws, inheritance tax affects 640,000 households each year, but it is claimed the LGT would affect up to 10 million homes.
However, Labour hit back at the figure and claimed it was too high as only 63 per cent of homes are actually occupied by the owner.
The shadow chancellor was asked by Sky’s Sophie Ridge if he was ‘attracted to the idea’ of the introduction of the LGT.
‘We are looking at it,’ Mr McDonnell said. ‘It might be one of those ideas and we are consulting on it at the moment… I think it’s interesting.
‘We need to have a fairer system of how we can ensure that wealth is more fairly distributed – that’s one idea and we are listening to a whole range of ideas.’
The move has been recommended in the report Land For The Many, which McDonnell commissioned.
Conservative Party vice-chairman Marcus Jones described the idea as a ‘siege on homeowners’.
He added that it would be ‘another Labour tax raid on people’s homes’.
‘Only the Conservatives are committed to lowering taxes and helping people achieve home ownership through our policies such as Help-to-Buy and cuts to stamp duty for first time buyers.’
A Labour spokesman asserted the plan is not currently part of their official policy.