The TaxPayers' Alliance - Media Coverage

Daily Telegraph: Flagship 'mansion tax' starts to crumble

THE Liberal Democrats' flagship pledge to tax £1 million houses was "unravelling'' last night as the party was unable to explain the basic details of the plan.

Vince Cable, the Lib Dem Treasury spokesman, said his plan for a new property tax would raise more than £1 billion, money the Lib Dems would use to raise the income tax threshold to £10,000.

An annual tax of 0.5 per cent would be levied on the portion of a house's value that exceeded £1 million, meaning a £1.5 million property would incur a £2,500 annual liability.

The pledge, intended to reassure Left-leaning members of the party who were concerned about plans for "savage'' cuts in public spending, ran into trouble as Mr Cable struggled to answer questions about its implementation.

Despite estimating that 250,000 houses would be affected, the Lib Dems were unable to say exactly which houses would qualify for the levy. Mr Cable said Land Registry sales records could be used to identify properties sold for more than £1 million. But he accepted that would exclude houses that were bought for less and subsequently pushed over that threshold by property price inflation.

He suggested that such properties could be inspected by the Valuation Agency to reassess their market value, but he was unable to say how the agency would choose which properties to re-evaluate.

Philip Hammond, the Tory shadow chief secretary to the Treasury, said Mr Cable's plan was "unravelling, unworkable and leaves basic questions unanswered''.

Matthew Elliott, Chief Executive of the TaxPayers' Alliance, called the plan "half-baked''.

"This tax would hammer those pensioners who behaved responsibly and bought a nice house when they were working, but thanks to the property boom and the pensions crash now own expensive houses but have next to no income,'' he said.

Mr Cable said that the tax could be "rolled over'' from year to year and then taken from someone's estate after death. The suggestion that the Lib Dems were effectively proposing a new inheritance tax further undermined what was meant to be the flagship policy declaration of the party's conference in Bournemouth.

The idea could also hamper Lib Dem MPs in affluent constituencies who are facing Tory challengers, especially since the Tories have pledged to cut inheritance tax.

Mr Cable also suggested that owners of large houses with low incomes should mortgage their homes to pay the tax. "There are equity release schemes and that is a way you can turn your wealth into income,'' he said. But the Lib Dems have consistently opposed property taxes, and argued that the council tax should be scrapped and replaced with a local income tax.

Mr Cable conceded that his new "mansion tax'' would only be a "temporary'' measure, which would be abandoned when the local income tax was introduced.

Mr Cable's plan had not been approved by the Lib Dem shadow cabinet or even discussed in detail. Asked if his colleagues had approved the plan, Mr Cable said only: "We're talking about it.''

Morning Star, Britain - Inheritance tax payments subject to late charges

Rich families who continue to make late payments on their inheritance tax will face higher charges from next month, the government warned yesterday.

HM Revenue and Customs is increasing the interest rate payable on late inheritance tax bills to 3 per cent while cutting the rate it pays in interest when it returns overpayments.

Following the death of a family member with an estate worth more than £325,000, relatives must pay tax within six months on a proportion of the money and property left to them.

From September, late payments will be charged at 2.5 percentage points above the Bank of England's historic low interest rate of 0.5 per cent.

A spokesman said: "Interest is not a penalty but compensation for tax paid late."

But campaigners for rich tax-dodgers claimed it was just "the government's addiction to debt, tax and spend."

Right-wing pressure group the TaxPayers' Alliance political director Susie Squire moaned that it seemed to be "very unequal and unfair."

Daily Telegraph, Stealth tax on dying; Treasury to raise pounds 10m by increasing interest rates on inheritance bills

GRIEVING families will be hit by a new stealth tax next month as the Government raises the interest rate payable on inheritance tax bills.

When a family member dies leaving an estate worth more than pounds 325,000, relatives are required to pay tax within six months on a proportion of the money and property left to them.

After that, they are charged interest, but since inheritance tax was introduced three decades ago, the rate has always been at a relatively low level.

Next month, it will increase from nothing to 3 per cent, raising some pounds 10 million from bereaved families.

At the same time, HM Revenue & Customs (HMRC) has lowered the rate it pays in interest when it returns overpayments made on inheritance tax bills.

Those forced to sell properties to settle their tax bill will be particularly hard hit.

Rather than delay in the hope of a higher price once Britain has emerged from the current housing crisis, they will have to rush on to the market. Last night accountants accused the Government of taking advantage of families during a difficult time, in order to increase revenues amid the recession.

Mike Warburton, of the accountants Grant Thornton, said the tax should not be treated in the same way as other duties.

"We do not choose when we die. Executors may find themselves having to raise funds to pay the tax in unfavourable market conditions. This can be a particular problem with property.

"Sadly this cash-strapped Government has now decided to do away with a structure that has operated successfully for a generation.''

John Whiting, tax policy director at the Chartered

Institute of Taxation, described the difference between the rates as unfair and unbalanced.

"It is a serious signal that the Government wants people to pay their taxes, and on time, as it needs the money,'' he said.

Currently, inheritance tax is charged at 40 per cent on any assets above the pounds 325,000 threshold.

However, if a person leaves everything to their surviving spouse, it is exempt from the tax, with the result that when the second spouse dies, their estate can be worth up to pounds 650,000 before death duties need to be paid.

Historically, interest on late payments has been either just above or just below the Bank Rate.

When the Bank Rate was cut to a historic low of just

0.5 per cent, both the rate for late payment and the interest paid by the taxman on overpayments dropped to 0 per cent. HMRC has decided

that, from next month,

late payments will be charged at 2.5 percentage points above the Bank Rate, while the interest it pays on refunds will be pegged at 1 percentage point below Bank Rate, although this will not go beneath a floor of 0.5 per cent.

Susie Squire, of the TaxPayers' Alliance, said: "It is a desperate move from the Government, which reflects the shambolic state of the public finances in our country at the moment.

"They are clearly putting up the rate to feed this Government's addiction to debt, tax and spend.''

A spokesman for HMRC said just 3 per cent of estates paid inheritance tax - estimated to affect 12,000 estates in the current tax year - and that those struggling to pay could choose to settle in instalments over as long as 10 years, subject to the 3 per cent late payment interest charges.

The revenue spokesman insisted the decision to increase the rate was nothing to do with raising revenue, but was simply a result of "harmonising'' rates across different taxes.

"Interest is not a penalty but compensation for tax paid late,'' the spokesman said.

"We are streamlining the rates charged and paid for interest.

"This has been subject to extensive consultation over the last 18 months and has been largely welcomed by customer groups and their representatives.

"The alignment of rates that will take place in September will mean that all tax paid late is subject to interest at the same rate, so ensuring all taxpayers are treated equally.

"And in the interest of fairness we will also be introducing a repayment interest floor, to ensure that any taxpayer overpaying tax will receive interest.''

In the most recent figures available, HMRC claims to have received pounds 9.7 million in interest and to have paid pounds 2.2 million in relation to repayments in the tax year ending 2007.

It expects to collect pounds 2.2 billion in inheritance tax in the current tax year.

TopNews United States: HMRC raises inheritance tax by 3%

HM Revenue and Customs has decided to raise the rate it charges from those who fail to pay an inheritance tax bill within the 6-month deadline by 3 percent.

When a family member dies and leaves an estate worth over £325,000 then his/her family is required to pay tax on a proportion of the property within 6 months. Late bills are charged interest.

So far, property worth more than £325,000 was taxed at 40 percent.

The current move of the HMRC has been described as "unjustifiable."

The raised tax will be charged from September onwards.

In short, HMRC will charge at a rate of 2.5 percent above the Bank's rate that is 0.5 percent. On the other hand, the interest rate paid on the overpayments will be made at 1 percent below the bank rate, though it will not go below 0.5 percent.

Speaking on the topic of increased tax, Taxpayers' Alliance' Susie Squire said, "I think it's a desperate move and a seriously retrograde step for the Government. It's basically one rule for them and another for everyone else."

BBC News: Bereaved families hit by tax hike

Bereaved families will have to pay 3% interest on late payments of inheritance tax from next month, HM Revenue and Customs has confirmed.

Such payments are due within six months of a death. Interest on late payments, which roughly followed Bank of England base rate, fell to zero in March.

Meanwhile, the Treasury will set the interest rate it pays when too much tax has been levied at 0.5%.

The Taxpayers' Alliance described the moves as "desperate" and "unfair".

Inheritance tax is levied on estates, including assets such as property, possessions, money and investments, worth a total of more than £325,000.

The value of the estate above that threshold is taxed at 40%.

In a statement, HM Revenue and Customs (HMRC) said: "Interest is not a penalty but compensation for tax paid late.

"We are streamlining the rates charged and paid for interest to simplify and make things fairer for customers.

"This has been subject to extensive consultation over the last 18 months and has been largely welcomed by customer groups and their representatives.

"The alignment of rates that will take place in September will mean that all tax paid late is subject to interest at the same rate, so ensuring all taxpayers are treated equally.

"And in the interest of fairness we will also be introducing a repayment interest floor, to ensure that any taxpayer overpaying tax will receive interest."

'Unjustifiable'

The interest HMRC pays on refunds will be pegged at one percentage point below the Bank's rate, but this will not go beneath a floor of 0.5%.

Since March, interest on late inheritance tax payments and the interest paid by HMRC on refunds have both stood at zero, while the Bank's base rate stood at 0.5%.

Susie Squire, political director of the Taxpayers' Alliance, said the public would be angry at the changes, which she described as "unjustifiable".

"It's a desperate move and a seriously retrograde step for the government," she said.

"It's basically one rule for them and another for everyone else."

She said the decision was "more about political point-scoring rather than raising any significant revenue" and added it was "feeding the government's addiction to debt, tax and spend".

Daily Express: ASYLUM CRISIS ALL UK'S FAULT

BRITAIN'S lax asylum system and benefits culture is to blame for the thousands of migrants who try to sneak into the UK from France, the mayor of Calais has claimed.

In a blistering attack on Labour's open door immigration and asylum policies, Mayor Natacha Bouchart accused Britain of turning the port into a staging post for illegal immigration and demanded millions of pounds in compensation.

Mrs Bouchart, a member of President Nicolas Sarkozy's ruling UMP party, said she was so disgusted by Britain's failure to deal with the crisis that she refuses to meet Government representatives, adding: "Calais is a hostage to the British."

Last night, the mayor received widespread backing in Britain.

Shadow Immigration Minister Damian Green said: "The Mayor of Calais is right that the longterm chaos in our immigration system, from badly protected borders to the Home Office not sending an officer to many appeal hearings, encourages people to try their luck. The answer for Britain and the people of Calais is a well-run immigration system with a proper Border Police Force."

Former Home Office Minister and Daily Express columnist Ann Widdecombe said: "She is quite right. It's undeniable that our immigration system is lax and our asylum system has collapsed.

"Until we start to house asylum seekers in secure accommodation until their applications have been processed there will always be an incentive to try to get to Britain - that is what the situation in Calais is all about."

Matthew Elliott, of the TaxPayers' Alliance, said: "The mayor makes a good point. A better solution would be for us to adopt tougher asylum laws to stop the UK being such a magnet for migrants and costing taxpayers so much money in the first place."

There are an estimated 2,000 British-bound migrants in the Channel region, with about 800 in Calais itself, refugee charities claim. Every night hundreds descend on Calais and other ports trying to stow away on lorries and trains crossing to Britain.

Mrs Bouchart said Calais was forking out GBP 12million a year in securing the busy ferry port from illegal immigrants. But she claimed Britain's immigration system was the main reason why thousands from Africa, Asia and the Middle East try to clamber on board lorries and trains in Calais every day to get to Britain.

She said: "Requesting asylum is easier with the British than in France.

The asylum seeker is given accommodation and receives GBP 31 to GBP 40 a week according to their case, when the annual salary of the average Eritrean is less than GBP 140. That seems enormous and it is attractive."

The mayor claimed Britain's opt-out of the Schengen agreement - which allows passport-free travel throughout Europe - benefitted the UK, as France has a duty to stop illegal immigrants from crossing the Channel.

She said the current build-up of migrants was untenable and it was now time to look again at the international agreements on illegal immigrants made following the closure of the notorious Red Cross camp at Sangatte in 2002.

Mrs Bouchart said: "Shutting the Red Cross Centre at Sangatte and the accords which followed were a good thing. But the situation has evolved. It is necessary to review the accords.

"It's no longer tenable. We are not here to do their job."

French Immigration Minister Eric Besson has pledged to come up with a lasting solution to the Calais crisis by the beginning of May.

The mayor's comments came as further details emerged of the controversial EU Common Asylum Policy that would allow migrants to claim asylum in Britain while in another member state.

Other proposals include creating a European Immigration Service, transporting refugees to the UK to claim asylum and setting up a 'resettlement agency' to help asylum seekers move around the EU. But last night Immigration Minister Phil Woolas dismissed the mayor's claims.

He said: "The illegal migrants in Calais are not queueing to get into Britain - they have been locked out by one of the toughest border crossings in the world.

"These successful controls have been possible thanks to the close cooperation of the French government.

"The UK policy is to not sign up to the Schengen Agreement. Free movement is only rightly available to legal entrants. Weakening our controls will only play into the hands of the traffickers who profit from human misery and suffering.

"Benefits are only available to those who play by the rules, work hard, pay taxes and learn to speak English.

"I have made it clear that those trying to cheat our system will not be tolerated, which is why last year UK Border Agency staff worked tirelessly at our French and Belgium controls, stopping more than 28,000 attempts to cross the Channel illegally."

Iain Dale's Diary: Boris Is Right to Oppose 45p Tax Hike

"It sends out a signal to people who create wealth, people who are energetic... can generate new industries or drive large enterprises of one kind or another... that we want to take more of their proceeds away than before. It is a deterrent to enterprise."

That was Boris Johnson on the 45p tax rate on ANY QUESTIONS last night. I couldn't agree more. The thing that I can't get over is that if Labour hadn't announced that tax for top rate payers would go up to 45p, I just can't seriously imagine George Osborne would have come up with the proposal himself. If he needed to find £2 billion he would have found it elsewhere. And therein lies the rub. Will it actually raise anywhere near that sum? Many economists believe that a rise of this sort may in fact do nothing of the sort. When this tax rise was first announced, I wrote...
This measure was nothing to do with economics, it was all to do with politics - class politics. So it's quite right that the response is political too. And the response has been perfect. "Reversing this would not be a priority" is what has been said by Tory spokesmen. Which says everything and at the same time, says nothing. Why should it? Because at the moment, there is nothing to reverse.

It is a profoundly unConservative thing to approve of class based tax increases. No Conservative I know of would do such a thing. There may well have to be tax increases in the future - Gordon Brown's economic chaos has almost made that a racing certainty. None of us know what the situation will be like in 2011, so why the Conservatives should have to give any response to the 45p rate at all is beyond me.
What I do not understand is the logic of moving away from this position. If you need to raise revenue from top earners why stop at a 5p rise? Hasn't the position significantly worsened since November? Using the logic of the argument, you could easily make the case for a 50p rate. Indeed, I can't quite understand why the LibDems have been so quiet on this. Didn't that used to be their policy?

Tim Montgomerie wrote a stinging piece on ConservativeHome yesterday afternoon attacking George Osborne.

We are told by the Tory leadership that it's too early to say what a Conservative government will do on public spending but it's not - apparently - too early to say we'll accept increases in taxation. That inconsistency betrays the party leadership's instinct to keep both public spending and taxes at Labour's relatively high levels - an instinct evident in the Tories' 2007 decision to match Labour on public spending increases.The focus should now be on how to curb spending. I don't expect to hear specifics on spending cuts - which there will have to be - but neither do I expect to hear specifics about tax rises. We're more than a year away from an election. Why be specific on these things at this stage in the cycle, when there is nothing to be gained by it? Yes, be honest about the situation the country is in, yes, give an indication of where you are heading in policy terms, but to commit to a 5p tax rise in April 2011 is not a sensible place to be.

I accept that George Osborne has left himself some wriggle room by using the phrase "difficult to avoid" but this whole debate was one which we didn't need to have.

I continue to believe that it is lower taxes which stimulate incentives and economic growth, not tax rises - and I think that is particularly true for top rate payers. The mantra all along has from the Conservatives has been for "flatter and lower taxes" This 5p rise meets neither aspiration.

Being honest with people about the state we are in is a good thing, and I am delighted George is taking far more about spending restraint, but it's about time he met with the Taxpayers' Alliance and learned a bit more about the negative effects of increasing top rate taxes. I'm sure they would be happy to provide the data.

Daily Express: MINISTERS PLOT A U-TURN ON INHERITANCE TAX CUTS

ALISTAIR Darling is being pressed to launch a punishing new inheritance tax raid on ­families in next month’s Budget.

It emerged yesterday that Labour ministers and backbenchers see it as a way to ease the Government’s cash crisis.

In a new drive to increase taxes, they are urging the Chancellor to scrap his ­doubling of the death duty threshold to more than £600,000 announced two years ago.

The move is understood to be under consideration because Treasury tax revenues are collapsing, with income from property taxes – such as inheritance tax and stamp duty – hit by the slump in house prices and sales.

Mr Darling confirmed yesterday that his Budget forecasts need to be drastically revised because of the unexpected severity of the economic downturn.

And in an indication of Budget preparations, Treasury Minister Angela Eagle claimed inheritance tax cuts helped only “the wealthiest few”. Many Labour MPs are now pressing for the death duty to be raised.

They also want a proposed 45 per cent top rate of income tax for people earning more than £150,000 to be increased and widened to include more taxpayers.

Pressure for the moves will increase concern that Labour is reverting to old-fashioned “class war” taxation policies and penalising bereaved families.

Inheritance tax is widely seen as a way of squeezing tax out of middle-class families.

Ms Eagle attacked the Tories for refusing to drop their pledge to scrap inheritance tax for estates worth under £1million.

She said the plan would “do nothing for 96 per cent of families”.

Instead, the Tories should support Labour’s £145 tax cut for 22million basic-rate taxpayers, she said. Mr Darling doubled the inheritance tax threshold in his first Pre-Budget Report in October 2007 by allowing married couples to combine their allowances.

The threshold is now £312,000 for an individual and £624,000 for a married couple.

The issue had been thrust on to the political agenda by a hugely popular Daily Express crusade calling for the abolition of the hated tax on the dead.

More than 300,000 readers signed our coupons calling for the abolition of inheritance tax, and over 120,000 backed an internet petition on the 10 Downing Street website.

Mark Wallace, of the Tax­Payers’ Alliance, said: “Not only is the tax unjust and unfair, but with house prices crashing any change in thresholds is unlikely to be more than a drop in the ocean in terms of their budget black hole.”

Daily Express: Brown blocks death tax bid

By Gabriel Milland Political Correspondent

RELATIVES who look after each other in old age are likely still to face punitive rates of inheritance tax.

An amendment to the Finance Bill being debated tomorrow would mean elderly siblings receiving the same treatment as married couples and homosexual civil partners.

But a Treasury source last night poured cold water on hopes that the Government would accept the amendment, due to be tabled by Labour rebel Frank Field.

The source insisted Labour had moved as far on inheritance tax as it would go.

Mr Field was prompted to act after the Daily Express revealed the ordeal of sisters Joyce and Sybil Burden, 90 and 82, two years ago.

They have spent all their lives in a house they jointly own in Marlborough, Wiltshire.

Under current law, the surviving sister would face inheritance tax of 40 per cent of the value of her share of the estate if her sibling died - meaning she is likely to have to sell their home.

The sisters unsuccessfully attempted to challenge the law at the European Court of Human Rights on the grounds of discrimination.

They claimed that if they had been a gay couple in a civil partnership, the entire estate could have been passed between them free of tax - using "spousal relief".

But in a 15-2 vote in April, judges in Strasbourg ruled that they did not face unfair discrimination.

Mr Field's amendment would mean that a brother or sister who had lived together for 10 years or more would enjoy the same protection from inheritance tax as married couples or civil partners.

TaxPayers' Alliance chief executive Matthew Elliott said: "It is clearly wrong for anyone to be forced to pay crippling death taxes at a time when they are vulnerable and in mourning.

"Inheritance tax is a greedy, heartless levy that kicks people when they are down.

"These ladies are clearly dependants and there are thousands like them who deserve exactly the same rights as people with a civil partnership.

"They have fought a brave fight against the death tax and MPs should back them to the hilt."

Gordon Brown reformed the hated death tax last year after a successful crusade led by the Daily Express.

He made married couples' allowance transferable, effectively creating a £724,000 tax threshold which exempts most families.

A Tory spokesman said they were sceptical about the amendment, leaving it standing even less chance of becoming law.

He added: "We think the best solution is our plans for a simple raising of the threshold for the tax to £1million."

Daily Telegraph: Inheritance tax to earn Treasury an extra pounds 400m

by Harry Wallop, Consumer Affairs Correspondent

A RECORD number of families will be hit by inheritance tax this year, with the Treasury expected to rake in an extra pounds 400 million, according to figures released by the Government yesterday.

In total the Treasury is expected to receive pounds 3.89 billion from the tax - an increase of 10 per cent on the last financial year, with the average family affected having to hand over pounds 111,000.

The figures, released by HM Revenue & Customs, came on the same day that separate Government data showed an increasing number of home owners paying stamp duty.

Government critics said the figures were proof that Gordon Brown's strategy of stealth taxes - introduced when he was in charge of the Treasury - showed no signs of slowing down now that he had moved to Number 10.

Ray Boulger, at the mortgage broker John Charcol, has started a petition to change stamp duty.

He said: "It's a classic stealth tax that has trapped an increasing number of people. It has to be changed to make it more sensible.''

The figures yesterday showed that 16,000 more home-buyers paid the tax in July, August and September than in the same period last year.

Last year, 59 per cent of all property transactions were liable for stamp duty, according to the HM Revenue and Customs, but in recent months 64 per cent paid, as the Government benefited from ever-rising property prices.

Experts said that these figures underestimated the number of people paying the duty, because they included land transactions and did not focus purely on residential property.

Land Registry figures suggest that one in eight home buyers now pays the duty.

The record Inheritance Tax windfall for the Treasury this year will come despite a recent announcement by Alistair Darling, the Chancellor, that from next year couples would be allowed to merge their allowances - doubling it to pounds 600,000.

A Treasury spokesman said: "The changes made by the Chancellor in the Pre-Budget Report made the IHT system fairer.''

However, the number of estates that have to pay the tax is expected to climb from 33,000 to 35,000 this year and the spokesman admitted that the Chancellor's initiative would not mean that significant numbers of bereaved families would be freed from paying the tax in future.

The forecast is also proof that the majority of couples already take advantage of existing loopholes to reduce the amount of inheritance tax they pay.

Even after a full year of the new allowances being in force, the Treasury estimates that it will receive pounds 3.3 billion - the same amount it received in the year to March 2006.

Property experts say stamp duty is starting to distort the housing market by making it too expensive for people to move house, or too difficult to get on to the housing ladder.

Corin Taylor, of the TaxPayers' Alliance, said: "Not only has the Treasury failed to raise the thresholds, they have also increased the rates paid on more expensive properties. It really has put the squeeze on middle-class families.''