REVEALED: Labour plots inheritance tax raid on ‘any gifts’ you get during your lifetime | Personal Finance | Finance

Polls show that inheritance tax is the most unpopular levy of all, as most people resent handing over 40 percent of their hard-earned wealth to HM Revenue & Customs when they die. They’d prefer their family to benefit instead.

Critics see IHT as a form of double taxation, charged on assets that have already been taxed at least once during a working lifetime.

They call it a cruel death duty, that hits mourning families when they’re feeling most vulnerable.

The left sees it differently. They believe that passing on money to loved ones drives social inequality, as it makes the children of wealthy people even wealthier.

Some argue that passing on wealth to children spells the end of society. Others believe property wealth needs to be collected and redirected to struggling young families.

A hardcore few have called for 100 percent inheritance tax, taking every penny of wealth and redistributing it to the poor.

There are some extreme ideas knocking around, and with Labour heading for a landslide victory in the General Election on 4 July, they may soon become a reality.

Plenty in the Labour Party would love to see leader Keir Starmer launch a punitive tax raid on family wealth.

Worryingly, they have support right at the top.

Shadow chancellor Rachel Reeves, who is likely to be in charge of the nation’s finances next month, is one of them.

In 2018, Reeves published a pamphlet called the “The Everyday Economy”. You can read it here. This was three years before Starmer appointed Reeves shadow chancellor, but it gives an alarming insight into her attitudes.

Inevitably, it contained a lengthy shopping list of radical tax hikes, or what she euphemistically labelled “reform strategies”.

She reckoned that together, they could raise around £20billion a year, which Labour could spend on projects close to its heart.

Wealth taxes, land taxes, savings taxes, investment taxes, capital gains taxes, pension taxes… wherever people have money, Reeves suggested taxing it.

Inevitably, her shopping list included inheritance tax. Reeves had big plans for that. She doesn’t just want to charge more, she wants to make it harder to legally avoid.

One way people can reduce their IHT liability is by making gifts to loved ones while still alive.

Everyone can gift up to £3,000 to a loved one each year, with instant IHT exemption, plus any number of £250 gifts to others.

They can also make gifts to children or grandchildren when loved ones marry.

Other gifts are known as potentially exempt transfers, which are only totally free of IHT if you live for seven years after making them.

Reeves doesn’t like this. She wants those gifts taxed. Every single one.

In The Everyday Economy she wrote that IHT “needs to be either reset or shifted wholesale to a tax on the receipt of any gifts throughout a lifetime, making tax on all gifts equal and thus avoidance more difficult”.

“Any gifts.” That’s quite extreme.

We don’t know what that means in practice. I’m assuming it doesn’t mean birthday and Christmas presents. Unless they exceed certain limits, that is.

And remember, she wants to tax those gifts “throughout a lifetime”. How is HMRC supposed to keep tabs on that? I dread to think.

Reeves is a serious character, a Gordon Brown for our times, so we have to take her seriously.

Especially since she is packing her policy team with people like Sir Edward Troup, who is also red hot on IHT.

Starmer has attracted a lot of flak this week for trying to expel hard-left Labour Party members like Diane Abbott.

Yet it looks like the real radicals are right at the top. Left-wing social warriors may find they enjoy a Starmer-led Labour government more than they expect. As for the rest of us…