Clause
8
Transfer
of unused nil-rate band
etc
Question
proposed, That the clause stand part of the
Bill.
11.45
am
Mr.
David Gauke (South-West Hertfordshire) (Con): Sir
Nicholas, what a great pleasure it is to serve under your
chairmanship—this is my first opportunity to speak during our
proceedings. I am delighted to learn that the sun was shining over the
fine county of Cheshire at the weekend—long may that continue.
The sun was also shining over the fine county of Hertfordshire on
Sunday.
I would like
to take the opportunity to make a few remarks on the
Government’s policy on inheritance tax and the provisions
contained in clause 8, with the details set out in schedule 4. We have
tabled a number of amendments about those details, which I will address
when we reach that point.
The
Conservative party welcomes attempts to address the issue of the
increased burden of inheritance tax. In 1997-98, 3 per cent. of estates
paid inheritance tax, but according to the most recent figures, that is
now up to 6 per cent. Research for Scottish Widows showed that
37 per cent. of households are now worth more than the inheritance tax
threshold. The average detached house price last September was
£326,000—above the then threshold for inheritance tax of
£300,000. The average house price may have changed since then.
None the less, inheritance tax is a concern for a far wider group of
people than was the case not so long ago. In my constituency,
relatively modest properties in towns such as Rickmansworth,
Berkhamsted and Tring—attractive towns, I would
concede—are well above the inheritance tax threshold. There is
great concern about inheritance tax and it would be churlish for us not
to welcome the move of allowing the nil-rate band to be transferred
between spouses and civil partners, as clause 8 and schedule 4 would
permit.
Not everybody
welcomes those provisions. In The Guardian of 12 October, Polly
Toynbee was most critical. I am sure, Sir Nicholas, that like me you
read Ms Toynbee’s articles with great interest. She
stated:
“This
was more than a horrible humiliation for the Prime Minister. This was
the week that social democracy ebbed away in
England.”
Indeed, she
makes a clear distinction between what is occurring with the devolved
Administrations in Scotland and Wales, and what is happening in
England. She went on to describe inheritance tax as “a Labour
talisman”.
In
a recent pamphlet, the Fabian Society described the announcement of the
Government’s policy on the issue
as
“a profoundly
depressing moment for those interested in fair
taxation”.
We do not
share that view. We think the fact that inheritance tax now applies to
a much wider group of people is unfair. There is consensus that there
is a role for it, but to apply it to relatively modest homes and
estates seems wrong. When inheritance tax hits ordinary families in
ordinary homes, it is right that it is reformed.
However, we do agree with some
of the criticisms made by the likes of Polly Toynbee and the Fabian
Society. The policy was a response to the Conservative party’s
policy on the matter, and the announcement by my hon. Friend the Member
for Tatton (Mr. Osborne) in Blackpool on 1 October, about
raising the threshold for inheritance tax to £1,000,000. The
Fabian Society paper describes the Prime Minister’s
“panic-stricken failure” to stand his ground, and the
pre-Budget report as a “panic-driven
surrender”.
A
letter to The Guardian on 15 April 2008 by various notable
figures on the left of British politics, referred to
“the Government’s
retreat in the face of a rightwing challenge over inheritance
tax”.
The letter was
signed by 14 Labour MPs, including one Parliamentary Private
Secretary. I know that Parliamentary Private Secretaries are not
necessarily all expected to support Treasury policy these days, but it
is striking that there was such distrust and opposition from Labour
figures to the policy. I note, however, that none of the signatories to
the letter is serving on the Committee—members have clearly been
selected with some care.
I refer again to Polly
Toynbee’s article of 12 October when she wrote about the Prime
Minister. It is an important point because it gets to the motivation of
the policy under clause 8 and schedule 4. She
wrote:
“But
when Cameron threw ‘phoney’ at him in Prime Minister's
Questions, it stuck like napalm. He could duck the bottles thrown over
his election funk, but ‘phoney’ will stick because his
comprehensive spending review smacked of panicky, comprehensive
cowardice.”
The criticism
was that the move was tactical, and it was reiterated this weekend by
the right hon. Member for North Tyneside (Mr. Byers) in an
article in The Sunday Times, in which he
stated:
“In the
past year far too many decisions about tax have been taken to try to
secure a tactical advantage. This has led to some damaging mistakes.
Whether in relation to the changes to inheritance tax, capital gains
tax, the treatment of nondoms or the abolition of the 10p income tax
band, the whole approach has been about political
positioning.”
Many
hon. Members, in the House and in Committee, might have that concern
about the policy and think that it is an act of political calculation
in response to a policy announcement at the Conservative party
conference that was undoubtedly extremely
popular.
Mr.
Jeremy Browne (Taunton) (LD): Does the hon. Gentleman
still regard the Conservative policy of raising the inheritance tax
threshold to £1 million as wise, rather than giving greater
assistance to those who are losing out as a result of doubling the 10p
rate?
Mr.
Gauke:
Of course, we are not discussing an either/or case.
The inheritance tax policy was wise, as was the raising of the
threshold. The policy responded to the legitimate concerns of a large
number of people. It was to be fully funded by introducing a levy on
non-domicile people within the United Kingdom. I do not regard the
matter as an either/or approach. As for the 10p rate, we will all hear
a statement about it later today, and we have called on the Government
to reopen the Budget. We shall learn this afternoon precisely what they
propose to do.
Mr.
Gauke:
We might. It will take some days before we learn
the full details and, on the basis of recent experience, we should not
rush to make a
judgment.
The
Chairman:
Order. I advise the hon. Gentleman that,
hopefully, we are debating the transfer of the unused nil-rate band in
respect of inheritance tax. I have allowed him pretty wide discretion
in dealing with inheritance tax, but the clause is fairly narrowly
drawn and relates to the transfer of the unused nil-rate
band.
Mr.
Gauke:
I am grateful to you, Sir Nicholas. I shall return
to that precise
point.
One of the
issues that has been disputed is when the Government decided to
introduce a transferable nil-rate band. There was an exchange on 6
November 2007 in the House of Commons when the Leader of the Opposition
raised that very question with the Prime Minister, and
said:
“look me in the eye
and tell me that you were planning to reform inheritance tax before our
party conference. Can the Prime Minister look across the Dispatch Box
and just say it?”
The
Prime Minister gave a clear response:
“The answer is
yes—unequivocally yes...All the records will show it, under
whatever rule they are released under the Freedom of Information
Act.—[Official Report, 6 November 2007; Vol. 467,
c. 33.]
There was a
press release on 8 November, two days later. It was certainly presented
in such a way that it seemed the Government had made the decision to
allow a transferable nil-rate band before the Conservative party
conference in October 2007. In examining when the Government made that
policy decision, it is worth looking at the Treasury press release of 8
November. It
states:
“We
have records of officials considering the proposal on January 9
2007.”
That is very
clear. There was consideration on 9 January, no doubt in the
run-up to the Budget of 21 March 2007. It is notable that,
although that Budget set out thresholds for 2010-11 for inheritance
tax, there was nothing on the transferable nil-rate band. Indeed, the
press notice that was issued alongside that Budget states that the
reason behind detailing the threshold for 2010-11
was:
“To
continue to provide a fair and targeted system, with certainty for
families”.
Given that
that was the position in March 2007, it would appear that there was no
intention at that point to pursue this proposal, although it had been
looked at.
On 27 July
2007, the new Chancellor received the paper detailing proposals on the
transferable nil-rate band. To be fair to him, on 20 August 2007 he
confirmed that the proposal was under discussion. I do not know what is
significant about 20 August 2007, other than that it was the day after
the publication of an article by my hon. Friend the Member for Tatton
criticising inheritance tax and dropping what could be described as a
fairly broad hint that a Conservative Government would look at that
matter and that there may be proposals on the way. We are aware that
the Chancellor was looking at these proposals at that point.
On 3 September 2007, the
Chancellor received further advice on the proposals and on 5 September
he asked officials to work up final proposals. I hope that I am giving
a fair account of what happened. Then, we learn, subsequent detailed
costings followed before the pre-Budget report set out all details on
inheritance tax reform on 9 October
2007.
It
was rather frustrating. The Treasury letter was quite detailed on how
the policy was developing, but it is rather like a detective thriller
with the last chapter ripped out. On 5 September the Chancellor asked
officials to work up final proposals. Then we heard little more than
that there were various costings. I will come back to the point about
detailed costings. We did not receive the detail. We did not learn
unequivocally—to use the Prime Minister’s
word—that the Treasury had decided to implement the policy
before 1
October.
Mr.
Mark Todd (South Derbyshire) (Lab): If this lengthy
discourse is intended to demonstrate that tax policy is at least partly
informed by political decision making, I am not sure that that is a
tremendously profound
argument.
Mr.
Gauke:
I am grateful to the hon. Gentleman because he
makes a reasonable point. Of course this was a policy that was more
than influenced by the proposals made by my hon. Friend the Member for
Tatton on 1 October. Our case is that that was the clinching aspect in
the Government adopting this approach. It is significant that the hon.
Member for South Derbyshire, who is an extremely reasonable man,
concedes that point, but the Prime Minister does
not.
Mr.
Browne:
The hon. Gentleman seems to be making a persuasive
case that there is no need to elect a Conservative Government because
his party is such an effective think-tank that the current Government
are pleased to take on its policies in their
entirety.
Mr.
Gauke:
It would be fair to say that the intellectual
weather is being created by the Conservative party. Unfortunately, the
Government are not as strong at implementing Conservative policies as a
Conservative Government would be. I will come back to that point in a
moment.
12
noon
It
is worth exploring how the policy formulation worked in this case. To
be fair to the Government, there was a reason why further details were
not provided. According to the Treasury letter, information was
identified as falling into the exemption to disclosure set out in
section 35(1) of the Freedom of Information Act, which relates to the
formulation or development of Government policy when it is not in the
public interest to disclose that information. Imagine the frustration
that Ministers must have felt if vital evidence proving that the
decision was made before 1 October was there, but officials declared
that it was not in the public interest to release the documents and
validate the Prime Minister’s words, particularly
given
the widespread scepticism of the media about the Government’s
claims that the decision was entirely unrelated to the Blackpool
announcement.
The
Times on 11 October, referring to the original drafts of the
pre-Budget report,
stated:
“it is understood
that inheritance tax did not feature... But when Gordon Brown
received polling data for marginal constituencies on Saturday afternoon
everything changed. The Prime Minister shelved plans for an election
and a decision was made to change the direction of the Pre-Budget
Report. With no election, Labour could neuter the Opposition by
pinching the very policies that had given the Tories a poll bounce in
marginal seats... The Chancellor and officials spent long hours on
Sunday rewriting the speech. This process continued through much of
Monday. Out went stamp duty and other tax cuts: in came inheritance
tax.”
There
were television reports on that particular Sunday. Jon Craig of Sky
reported that a number of Treasury civil servants arrived at No. 11 at
6 pm
“in what looked
like their gardening clothes or embarrassing leisure
wear”.
I think that that
was unnecessarily critical of Treasury officials. I am sure that they
look splendid at the weekend. He surmised that they had been summoned
at very short
notice.
The
Chairman:
Order. I am a very kind and caring Chairman. The
hon. Gentleman is making a fascinating and entertaining speech, but it
is not entirely relevant to the clause before us. Can I give him some
advice? He is going a little bit too wide. If he could come back to the
clause itself, the whole Committee would be very
grateful.
Mr.
Gauke:
I am grateful for your advice, Sir Nicholas. I will
stay off the leisure wear or otherwise of Treasury officials, but I
should like to make one brief point on the freedom of information
request on the formulation on this policy. Section 35(1) of the Freedom
of Information Act 2000 was the reason why further details as to when
the policy decision was taken were not revealed, yet section 35(2)
states:
“Once a
decision as to government policy has been taken, any statistical
information used to provide an informed background to the taking of the
decision is not to be regarded... as relating to the formulation
or development of government
policy”.
Why is that
significant? It is significant because we were told that a number of
costings were prepared by Treasury officials. If any decision was made
to implement the policy before 1 October, any costings subsequently
produced could have been released under section 35(2). The Committee
may draw its own conclusion from the fact that they were
not.
I should like to
make a number of observations, raise some concerns about these specific
provisions and explore at greater length the issues contained in the
amendments concerning the various groups that do not benefit from the
nil-rate band. It is worth observing that the transferable nil-rate
band relates only to married couples and civil partners, so the
divorced and unmarried will not be able to benefit from those
provisions. In other contexts, the Prime Minister has effectively said
that recognising marriage within the tax system discriminates against
children of single or unmarried parents, so I would be grateful to know
whether the Financial Secretary believes that the tax system should
recognise marriage in the way it does
within the provision on the transferable nil-rate band and whether that
principle could and should be recognised more widely. Of course, another group of
people who are excluded by those provisions are siblings, and there
have been recent cases in the European Court of Justice and the
European Court of Human Rights in which siblings have addressed that
issue with regard to inheritance tax. Will the Minister shed further
light on the Government’s position on that and on whether there
is an argument for recognising the position of siblings in those
circumstances? There is also the point about whether that helps all
spouses, which we will explore in a moment. The amendment that relates
to estate duty is particularly important, and we will come back to
that.
A number of
married couples and civil partners are already able to benefit from the
existence of nil-rate band trusts. If a couple have been properly
advised, they could already benefit from a transferable nil-rate band.
I do not know whether the Financial Secretary has any information on
the extent to which nil-rate band trusts are already used, but she
probably needs that information to assess the cost of that policy. If
transferable nil-rate band trusts are in widespread use, the cost of
the policy will be somewhat reduced, but the number of people
benefiting from the change would perhaps not be as great as has been
presented. I will be grateful if she looks at that
point.
There
is also the issue of the administration of the policy. In many
circumstances the transferable nil-rate band could be used in cases
where a spouse has died some years ago, but in those circumstances it
might be difficult for the surviving spouse or their heirs to locate
all the necessary documentation. That point was raised on the
“Money Box” programme on 3 May—I am not sure
whether the Minister heard it. It highlighted that the relevant form
for benefiting from the nil-rate band states that it must be
accompanied with the death certificate, the marriage certificate, the
will, documents relating to the grant of representation and any deed of
variation. Of course, the marriage and death certificates might be
available from the Public Record Office, as the Financial Secretary, to
be fair to her, will probably point out. The will and grant of
representation will be held by the courts in some cases, but not in
all. That raises the question of how the new policy will be enforced:
will it be a light-touch regime, or will Her Majesty’s Revenue
and Customs rigorously enforce the requirement to produce all of those
documents?
A related
and ongoing point is that the better the record keeping, the more
easily the policy can be implemented. Will there be any attempt to try
to publicise the requirement to retain records? Having introduced the
policy, we do not want to find individuals running into difficulties
because they cannot locate all the documents that they need to use the
new rate band. There could be a considerable number of years between
the death of the first and the second spouse; I am sure that the
Minister will agree that that is a legitimate concern. Guidance as to
how HMRC wishes to deal with that matter will benefit the
Committee.
In
conclusion, we will raise our concerns and scrutinise the policy, but
we recognise that it is an attempt, for whatever reason, to deal with
inheritance
tax and the fact that far more people are hit by it now than was once
the case. In that sense, we welcome it, but we question why the
Government have introduced it. As the hon. Member for South Derbyshire
pointed out, political considerations may have played more than a small
part in that—not his phrase but, I think, the implication of
what he was saying. If we have succeeded in taking the Government in a
particular direction, we are certainly pleased about that. We have
various questions about how the policy will be administrated and will
be grateful if the Financial Secretary can address those
matters.
Mr.
Colin Breed (South-East Cornwall) (LD): I will not detain
the Committee for very long, because this is a fairly simple and short
clause. We all know that inheritance tax is a tax on transfers of value
on death and also on certain lifetime transfers. It was introduced way
back in 1984. In a previous life I was involved in it, and to think
that it was 24 years ago seems amazing. When someone dies, their estate
is chargeable to inheritance tax. The clause and the provisions in
schedule 4 insert new section 8A into the Inheritance Tax Act 1984 to
allow a surviving spouse or civil partner to benefit from the unused
part of the IHT nil band of their
partner.
At
present, the first £300,000 is chargeable at a nil rate and the
excess value is taxed at 40 per cent. The amendments mean that in
future the remaining partner could pass on £600,000 free of
inheritance tax on their death. On that basis, we support widening the
exemption so that families can increase the chance of exempting the
family home or their estate from IHT. However, there are a couple of
aspects that we would like some clarification on. We seek the
Minister’s reassurance on issues brought to our attention by the
Association of British
Insurers.
Under new
section 8A(5), is the amount of nil-rate band that can be claimed on
the death of the surviving partner limited to one marriage? What
repercussions will that have for the taxpayer? Does the amendment to
the penalty provision applicable when someone provides incorrect
information make the person making the claim liable for any error, even
if it was the deceased who gave that misinformation or lied on the
original claim? Those are interesting and technical points, which I am
sure the Minister will be able to give some reassurance on.
Another point, which has been
touched on by the hon. Member for South-West Hertfordshire, is in
respect of those people who may have already paid some of the old
estate duty because a spouse died a very long time ago, and are now
liable for inheritance tax because they will not be able to claim the
nil band. I think that one of the amendments to the schedule addresses
that issue. It is an issue for a relatively small number of people, but
I think that it will be unfair, even with those few people, if we do
not address that. I will leave my remarks about that aside, but,
overall, we are supportive of the clause and hope that we can address
those other aspects in the discussions on the
schedule.
12.15
pm
Mr.
Field:
I confess that I support anything that mitigates
the effects of inheritance tax. Therefore, although elements of the
proposal are slightly
unsatisfactory—I agree with a number of the comments made by my
hon. Friend the Member for South-West Hertfordshire—it is a step
in the right direction. I appreciate that now is not the time for a
long discourse on inheritance tax—I see you nod sagely, Sir
Nicholas—but one of the biggest problems about inheritance tax
is that some of the wealthiest do not have to pay it, because they are
able to order their affairs over many years with lifetime
trusts.
One of the
biggest concerns, as my hon. Friend said, is that so many people now
find themselves subject to inheritance tax as a result of rising house
prices. Part of the difficulty with that is that there is no
opportunity for such individuals to mitigate the effect during their
lifetime. Their main home is obviously the place in which they have to
live. Such people regard themselves as being asset-rich but cash-poor,
and they are not in any position to mitigate that. Although at one
level it might warm the Minister’s heart to know that 6 per
cent. of estates pay inheritance tax, dare I say that it is often the
wrong 6 per cent. that pay?
One can
argue—I could understand such an argument, although I might not
entirely agree with it—that if we are to respect the idea of a
life well lived, very wealthy people should be able to pass on certain
things at their death. The worry is that the tax affects more than just
middle England in our constituencies, Sir Nicholas. I note that there
is great sun here in London, along with that in Cheshire and
Hertfordshire. It is a coincidence that Hertfordshire, and, technically
I should say Chester and west Cheshire, are two of the only counties in
which I have lived outside London.
Emily
Thornberry:
Get on with
it.
Mr.
Field:
I lived in Islington, North as well for a while.
Thankfully those political memories are well in the past, which is just
as well, as I would not have wished to infringe either on the hon. Lady
or on her next door neighbour in Islington,
North.
My hon. Friend
the Member for North-East Hertfordshire has raised some legitimate
concerns. First, there is the sense of injustice felt by siblings
living together, or unmarried couples whose relationship is of long
standing, who will not qualify for any benefit under the nil-rate band.
I hope that the Government will give some thought to that problem, not
necessarily within the context of this year’s Finance Bill, but
perhaps in the years ahead to ensure a just settlement.
I am particularly concerned
about paperwork, particularly where the two relevant deaths are many
years apart. I speak from my own experience as executor to my late
father’s will some 17 years ago—I have no idea where
those papers are now. We would like some reassurance that there will be
a soft-touch approach by HMRC to such cases because, I hasten to add,
if someone like myself has not got hold of those papers, I suspect that
many others will have found that various papers have been mislaid,
perhaps during two, three or four different moves. I hope to get some
reassurance that no great rigour will be expected in that regard, and
that the evidence will be straightforward and easy to obtain from any
beneficiary.
I hope that we can initiate a
strong debate, not only on the clause, but when we come to the meat of
the matter in schedule 4, in respect of which my hon. Friends have made
a number of recommendations and proposals. I hope also that the
Minister will have some robust words of reassurance with regard to the
important elements mentioned by my hon. Friend the Member for
South-West Hertfordshire and the hon. Member for South-East
Cornwall.
Jane
Kennedy:
As the hon. Member for South-West Hertfordshire
has said, clause 8 introduces schedule 4. There is a tax-free allowance
or a nil-rate band levied on the estates of the deceased that takes the
first part of every estate out of charge. Any excess is charged at a
marginal rate of 40 per cent. As previously announced, the threshold of
the individual nil-rate band for the current financial year is set at
£312,000. It is set to increase in future years—to
£325,000 in 2009-10 and to £350,000 in 2010-11. In
addition, the inheritance tax legislation includes an exemption for
transfers of assets to a spouse or civil partner. Many people use this
spouse exemption to leave everything they own to their surviving spouse
or civil partner without triggering an inheritance tax
charge.
The changes
announced in the pre-Budget report build on the long-standing spouse
exemption. Under the new rules, if any nil-rate band remains unused on
the death of the first spouse or civil partner, it may be carried
forward for use on the second death instead. That means that if none of
the nil-rate band is used up on the first death, the nil-rate band for
the second death will be doubled. In 2008-09 it may be possible to
exempt up to the first £624,000 of a widow or widower’s
estate from inheritance tax, and, on the basis of the planned increase
in the nil-rate band, that amount will rise to £700,000 by 2010.
That ensures that the heirs of all married couples and civil partners
will be able to benefit from both partners’ individual nil-rate
bands, without the couple needing to have undertaken complex legal and
financial planning. The change will reduce the number of tax-paying
estates. For 2008-09 the Government estimate that only about 4 per
cent. of deaths will give rise to an inheritance tax
liability.
The hon.
Member for South-West Hertfordshire asked a number of questions. I will
try to deal with each in turn, particularly the pertinent
questions—I will not be drawn down any of the other lines of
debate, Sir Nicholas. The inheritance tax powers relief reflects the
formal rights and responsibilities that marriage and civil partnership
relationships necessarily entail. The hon. Gentleman asked about
siblings: he will be aware of the European Court of Human Rights
judgment in the case of Burden v. United Kingdom. We welcomed
that judgment, which recognised that cohabiting couples are not in a
comparable position to a married couple or civil partnership for the
purposes of inheritance tax.
The hon.
Gentleman also asked about documentation, as did the hon. Member for
Cities of London and Westminster. This is a valuable relief, so it is
right that individuals have to provide relevant documents to support
their claim. We are aware, however, that where the first death occurred
before the 2007 PBR announcement, the estate may not have retained all
of the relevant
documents. That is why in such cases HMRC guidance requires in support
of a claim only copies of documents that can be obtained from public
sources. I assure the hon. Member for South-West Hertfordshire that
HMRC has already published guidance on its website about the documents
that should be kept and that information is also included in the pack
that people receive when they are dealing with the estate of a deceased
spouse or civil
partner. The measure
reduces the number of tax-paying estates by about 40 per cent., to only
4 per cent. of estates. Those are the facts, irrespective of what other
commentators may claim. The number of tax-paying estates in 2008-9 is
estimated to be about 23,000. More broadly, the measure provides the
certainty and reassurance of a double allowance for 12 million married
couples or civil partnerships.
The change
ensures that heirs of all married couples and civil partners will
benefit, without the couple needing to have undertaken complex legal
and financial planning, as I have said. The costs were scored as normal
in the PBR and Budget reports and, for the Committee’s
information, they are costed at £1 billion in 2008-9,
£1.2 billion in 2009-10 and £1.3 billion in
2010-11.
The hon.
Member for South-East Cornwall asked about occasions when there had
been more than one marriage or civil partnership. The transfer is
limited to one extra nil-rate band for a good reason: it is a pragmatic
step to prevent any one individual accumulating a large allowance. We
consider that one extra nil-rate band is sufficiently generous. It
hardly needs saying that that is sensible, but it was worth it for the
humour.
Mr.
Breed:
I thought that may be the case. It is a matter of
balancing the benefits of a large number of allowances against the
disbenefits of a large number of
wives.
Jane
Kennedy:
We will simply nod at that. The hon. Gentleman
also questioned the penalty provisions. We will return to those
in the debate on amendment No. 64, when I will give further
details.
The clause
will provide welcome simplification and reassurance for millions of
married couples and civil partners. The hon. Member for Cities of
London and Westminster talked about those who are asset-rich and
cash-poor and who believe that their ability to demonstrate a life well
lived in having a benefit to pass on to their families was being
undermined. He described the effect of the rise in house
prices.
Well over a
year before this measure was announced in the pre-Budget report, I met
a constituent in Liverpool, Wavertree who had worked as a joiner for
Liverpool city council for the whole of his working life—more
than 40 years. Early in his life he had married and he and his wife
bought the house that they lived in for the whole of that period. They
bought the most expensive home that they could afford. It was a large,
comfortable family home. It was not a huge dwelling and by London terms
was perhaps relatively modest; none the less, they kept that home and
cherished it throughout their married life.
When the man came to me he was
angry and distressed because he believed that the value of the property
had risen to the point where his family would
not benefit from the relief from inheritance tax. It had done precisely
what he hoped it would do when he bought it: it was the only thing of
value that he had to pass on to his family. I felt a huge amount of
sympathy for the case that he made. For that reason, I believe that the
measure that we are making is a good one. I believe that it will be the
cause of enormous relief to many families across the country who have
seen the value of their homes increase in the way that I have just
described and for whom it is the only benefit that they can leave to
their
families. I
am sure that having heard the debate, notwithstanding the questions
that have been raised, the Committee will agree to see clause 8 stand
part of the
Bill.
Mr.
Gauke:
I am grateful for the right hon. Lady’s
remarks. The example that she gave of the joiner who had worked all his
life demonstrates why there are concerns about inheritance tax. She
expressed that very clearly and I am glad that she takes a similar view
to my party, as opposed to that of Ms Toynbee and the Fabian Society. I
will not dwell on that
point.
I am grateful
for the right hon. Lady’s remarks on administration, paperwork
and documentation. I hope that in the implementation of this policy
HMRC will pursue the approach that she has outlined of not requiring
documentation that will not be easily available from public records.
She touched briefly on the question of recognition of marriage within
the taxation system. The Conservative party supports that principle.
There are other taxes where a stronger case could be made for such
recognised, but I think that it should be recognised. We note that, in
principle, the Government support that view in the context of
inheritance tax, if not
elsewhere.
I
apologise if I missed the point about the number of nil-rate band
trusts in existence. I am not sure whether the Government have it, but
the number is relevant when working out the actual cost of the policy
to the Exchequer. When making the announcement, the Government did not
particularly acknowledge the number of families that would benefit from
the arrangements in the immediate aftermath of the pre-Budget report. I
did not spend a great deal of time on the matter earlier, but in a
period of rising house prices—although, admittedly that is not
the case at present—it may still be worth while for married
couples to have a nil-rate band trust, and they are likely to continue
to do so. However, the significance of the policy to the Exchequer and
to a number of people will depend on whether they already have such a
trust in
place.
12.30
pm
The Financial
Secretary would not be drawn on when the decision was made to introduce
a transferable nil-rate band. She is being very wise, which is more
than could be said of the Prime Minister on 6 November 2007,
when he unequivocally stated that the Government had been planning to
take such action before 1 October. The Committee will be pleased to
know that I shall not expand on that point. We shall not oppose clause
8 because it is a step towards dealing with a serious concern that
affects many people. It is not as big a step as we would want, but we
welcome the Government’s
proposals.
Question
put and agreed
to.
Clause 8
ordered to stand part of the Bill.
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