Osborne: 'We are the low tax party'

The Conservatives today argued ordinary families should be exempted from inheritance tax, as the so-called 'death tax' becomes the preserve of the rich.

Shadow chancellor George Osborne said a Conservative government would raise the threshold for paying inheritance tax to £1 million, as opposed to £250,000 at present.

This would be funded by a flat £25,000 charge on all people working within the UK and claiming non-domicile status.

Only six per cent of estates are liable for inheritance tax at present. However, Mr Osborne said today over a third of homeowners – who have seen the value of their properties soar in recent years – have the "threat of inheritance tax hanging over them".

He told the Conservative conference nine million families would benefit if the system was reformed so only millionaires pay death duty.

Declaring "we are the low tax party," Mr Osborne also set out plans to abolish stamp duty for first-time buyers.

The threshold for stamp duty should be raised to £250,000 to take 200,000 people out of stamp duty, he argued.

To fund this, the shadow chancellor advocated a flat annual levy of around £25,000 on anyone that registers for non-domiciled tax status.

He said this would be "easy to administer, difficult to avoid and strikes the right balance between a fair tax system and a competitive economy."

Speaking on the fringe after his speech, Polly Toynbee welcomed his willingness to talk about non-domicile status, adding Gordon Brown has been "cowardly" in avoiding it.

But, the journalist and writer criticised his proposals to scrap inheritance tax for all but the very rich, arguing the majority of people will not pay the tax if they downsize in later life.

Ms Toynbee said Mr Osborne was acting like Robin Hood, except "stealing from the stratospherically rich to give to the very rich".

The shadow chancellor told delegates in Blackpool he would be an ally to those who aspire and a friend to those left behind.

As the Conservatives attempt to redraw the political lines between themselves and Labour, Mr Osborne said voters were offered a "dividing line between a prime minister who has taxed a generation out of home ownership and a Conservative government that will abolish stamp duty for first-time buyers."

Repeating the offical party line, he insisted the Conservatives are ready for an autumn election.

He said: "If you want an election, prime minister, then get on and call it; because you cynicism and your fear will lose every time to our hope and optimism."