Red Wall Tories urge Rishi Sunak to cut taxes for working families

Red Wall Tories today urged Rishi Sunak to focus on cutting taxes for working families rather than slashing death duties for the better off.

The Prime Minister is considering sweeping reforms to inheritance tax in the Budget in a bid to highlight the tax divide with Labour. Today's Mail revealed that the headline 40p rate could be cut in half to 20p.

Now some Tory MPs have urged the PM and Chancellor to go further and abolish inheritance tax, which is regularly named as the nation's most hated tax.

But others called on ministers to prioritise tax cuts for workers in order to ease the cost of living and boost growth. 

John Stevenson, chairman of the Northern Research Group of mainly Red Wall Tory MPs, said it would be better to focus on reducing taxes on income or raising tax thresholds, which have been frozen for six years to help pay for pandemic spending.

Mr Stevenson said: 'We should concentrate on incomes and thresholds rather than inheritance tax. That produces more benefit for a greater number of people.'

Former Cabinet minister Sir Simon Clarke, MP for Middlesbrough South and East Cleveland, acknowledged that inheritance tax was widely disliked and 'often feels unfair', but said the priority should be cutting taxes hitting working families, such as income tax, council tax, fuel duty and VAT.

Stoke-on-Trent North MP Jonathan Gullis said the Government should use the Budget to cut the basic rate of income tax and raise the threshold for paying 40p tax, which has barely risen from the £50,000 level set in 2019. 

Some southern Tories highlighted other priorities. Former Cabinet minister Damian Green said the Government should prioritise help for first-time buyers struggling to get a foothold on the housing ladder.

Mr Green added: 'I would put helping people become homeowners the top priority for whatever money the Chancellor has.' 

Sir John Redwood said the March 6 Budget 'must deliver tax cuts that cut inflation and boost growth' – and highlighted energy taxes and the IR35 tax regime for the self-employed as prime candidates for reform.

But other senior Tory MPs welcomed the focus on inheritance tax and urged Mr Sunak to 'be bold' and go further. 

Ranil Jayawardena, chairman of the Conservative Growth Group, said: 'Time is running out and the Government needs to be bold: It's time to scrap inheritance tax.

'It is the least popular of taxes with people of all incomes because it is anti-aspirational, anti-family and is simply unfair.' 

Sir Jacob Rees-Mogg said inheritance tax was 'a pernicious and bad tax, which ought to be scrapped'. 

Downing Street has dismissed reports that inheritance tax could be axed as 'speculation'.

But Mr Sunak said this month he plans a 'gear shift' on tax cuts next year. 

Cuts to inheritance tax, income tax and stamp duty are all thought to be under consideration as the PM gears up for a general election next year.