London’s incrementally outgoing Conservative mayor has devoted his entire Telegraph column to praising David Cameron’s pledge to raise the level at which inheritance tax applies to family homes to £1m. According to Boris Johnson, this “great move” will help end “the unfairness of a tax that has crept up on countless ordinary families”, and particularly those in London and the south east of England.
He provides a theoretical example of “an elderly woman living in an Outer London suburb” with a home worth just under half a million quid whose children would, under the current arrangements, be taxed to the tune of £66,000 if the property is left to them on their mother’s death “simply because they live in an area where house prices have gone up.” Because their mother lived in such an area, I think, Mr Mayor - her grown-up children might well have been priced out long ago. But the general message is received.
The Evening Standard is sending that message out too. It quotes Johnson denouncing the “injustice” of inheritance tax thresholds as they stand and Conservative chairman Grant Shapps contrasting the policy with Labour’s mansion tax (which the Standard too opposes). The paper has invited estate agents to put a figure on the number of London homes that would escape what it calls the “inheritance tax trap” if Cameron’s plan came into effect. Confirming that London and the south-east would be the biggest winners, it quotes a Savills estimate that “up to” 250,000 homes in the capital would escape the inheritance tax net.
Johnson’s high profile support and the undoubted truth that London would be more affected by the proposed change than anywhere else in the UK shows that the Conservatives must hope the policy can lessen Labour’s huge lead in London, measured at 11 and 14 points in the last two London-wide opinion polls and putting Ed Miliband within sight of gaining eight or more absolutely precious London seats. A very recent Lord Ashcroft poll in Labour target Harrow East found that a three-point Tory lead in December has turned into a four-point lead for Labour.
However, the impact of the inheritance tax move might not be as helpful to the Tories as the “up to” 250,000 figure suggests. At least, that’s what a Labour source argues. It is pointed out to me that Cameron has been waving the inheritance tax flag for quite some time and that people with elderly parents are often more worried about having to sell family homes before a parent-occupier dies in order to pay care home bills. Labour is also confident that any advantage the Tories secure will be comfortably trumped among London swing voters by Ed Miliband’s promise to end “non-dom” tax status and clamp down on tax avoidance generally. The next bespoke London polls might hold some clues to who is right.
