HL Deb 19 January 1988 vol 492 cc75-6
Lord Boyd-Carpenter

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what is the annual yield as at the latest convenient date of inheritance tax on the first or principal home of a deceased taxpayer.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the information is not available in precisely the form requested by my noble friend. To exempt all residential property from inheritance tax on death is estimated to cost around £250 to £300 million.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for that Answer and the for the implication that the cost of what is suggested in my Question would be less than the figure he named. Is he aware that a concession is already made in respect of capital gains tax on a person's home and that an extension of this would carry the Government's policy of making us a home-owning democracy further into another generation?

Lord Brabazon of Tara

My Lords, I am aware that the capital gains tax concession is applicable to primary residences. However, I am not aware of any proposals to extend it to inheritance tax. Of 660,000 people who die each year in the United Kingdom only some 4 per cent. of estates are liable to inheritance tax and as regards estates above the threshold around only a quarter of the value on average lies in a house.

Lord Bruce of Donington

My Lords, is the noble Lord aware that the great majority of the people of the United Kingdom do not have personal disposable assets above the £90,000 limit proposed in the inheritance tax legislation? Would he not think it more seemly that if there are funds at the disposal of Her Majesty's Government at the time of the next budget those funds should be devoted and directed to the less fortunate and less wealthy sections of our population?

Lord Brabazon of Tara

My Lords, in answer to my noble friend's supplementary question I said that only some 4 per cent. of estates are liable to inheritance tax. As regards any funds which are, as the noble Lord put it, available at the next budget, that is a matter for my right honourable friend the Chancellor of the Exchequer. We are rather near budget time now for me to make a comment on it.

Viscount St. Davids

My Lords, will the noble Lord confirm that there is no inheritance tax payable between husband and wife and that therefore there is no question of widows and widowers being thrown out of the home for any such reason? It is the next generation—those who have some interest in the family home but who nevertheless may have homes of their own by then—about which we are talking.

Lord Brabazon of Tara

My Lords, the noble Viscount is quite correct. The inheritance tax is payable only on the death of the last surviving spouse. I should say that if the suggestion made in my noble friend's Question was carried through and there was no inheritance tax on the first or principal home, it would have a fairly marked impact on the house market. Presumably those who thought that they were going to die would immediately buy the most expensive house that they could find in order to exempt themselves from inheritance tax.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that the Inland Revenue could easily cope with that comparatively easy gambit by imposing a time limit? Is he also aware that the present high price of houses has the effect of pushing into inheritance tax people who have very few other means but whose houses have become highly rated? Will he express rather more sympathy than the noble Lord, Lord Bruce, with the families turned out of a home which they had hoped would continue to be theirs?

Lord Brabazon of Tara

My Lords, we are sympathetic. Beneficiaries who retain the home may pay tax in instalments over 10 years. That would probably not be very much different from what they might have to pay on normal mortgage repayments. Therefore with luck they should not be turned out of the family home.

Lord Mishcon

My Lords, does the Minister claim to have any knowledge of human affairs when he announces to the nation that it is the likely conduct of somebody who is about to die to walk out and try to find an expensive house?

Lord Brabazon of Tara

My Lords, I am saying that if the suggestion made by my noble friend were carried forward it would be a fairly obvious tax dodge for people to attempt.

Lord Mackie of Benshie

My Lords, does not the Minister agree that he might employ a clever solicitor?

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