Inheritance Tax

Daisy Cooper Excerpts

Wednesday 14th October 2026 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

It is good to see the shadow Chancellor open this debate, because after his conference speech I too was not sure whether he would be trusted to close it. The shadow Chancellor was not the only Conservative Front Bencher to deliver an interesting conference speech, as the Leader of the Opposition simultaneously told us that every spending commitment would be matched by a source of funding, but then proceeded to announce a string of unfunded pledges—[Interruption.] Oh we got the numbers. It is clear that “Keminomics”—[Interruption.] I think the official Opposition are slightly rattled, Madam Deputy Speaker. It is now clear that “Keminomics” is simply Trussonomics 2.0, and if Conservative Members get anywhere near the levers of power again, or if they choose to hand the keys to No. 10 to Reform UK, they will once again propel this country towards another crash in the public finances.

Let me turn to the substance of the motion. We Liberal Democrats agree that the inheritance tax system is not fair. Ordinary families can face an inheritance tax rate of 40%, while those inheriting estates worth tens of billions of pounds are often able to avoid paying their fair share through complex tax planning and accounting arrangements.

[Noah Law]

There are issues with the current administration of the tax, but those are more to do with the fact that many of the wealthiest are avoiding it. Does the hon. Lady agree that businesses are genuinely in a better place to receive tax planning advice, so while there are a lot of retorts about the difficulties of selling plant and machinery, for example, businesses are better placed than households to take on that tax planning?

[Daisy Cooper]

Households and businesses feel absolutely hammered by the tax burden at the moment. On the subject of this particular motion, I hope we can agree that there is a problem because the wealthiest people can avoid inheritance tax through various loopholes.

[Noah Law]

Does the hon. Lady really believe that the top 4% of households are being “hammered” by inheritance tax right now? I do not believe that is the case.

[Daisy Cooper]

The hon. Gentleman’s first question was broader and was asking about the capacity of businesses generally to pay for advance tax planning. Hopefully we can all agree that the tax code in this country is so complicated that unfortunately people must seek expert tax advice. Our tax system could be much simpler. The point that I was trying to make is that there are problems and loopholes with this particular tax. We have one of the highest headline rates of inheritance tax in the OECD, yet only 4% of estates end up paying it. The burden often falls on those who cannot take advantage of the loopholes and exemptions that are available to those with access to expensive tax advice.

We would reform inheritance tax to make it fairer, but let us be clear: a mini-Budget style approach to tax cuts is not the way to do it. There is a better alternative. If we want to help people who are being squeezed by the cost of living, the fairest and most effective approach is to cut income tax. We Liberal Democrats have done that before; when in power, we would do that again. In Government, we cut tax for millions of people, taking 3.4 million people out of income tax altogether. Today, we Liberal Democrats are committed to raising both the income tax personal allowance and the national insurance threshold to £15,000 over five years—[Interruption.] Conservative Members ask where we are going to find money for that—I will tell them.

[Paul Holmes (Hamble Valley) (Con)]

The hon. Lady is making an excellent case for her leadership campaign. If the Liberal Democrats got into government and put these policies forward, does she believe that the leader of the Liberal Democrats would be there to do it?

[Daisy Cooper]

Yes. Of all political parties represented in this Chamber, the official Opposition will know that the leader of the Liberal Democrats was an excellent climate Minister in the coalition Government. Our party leader is an economist and would never, ever have done what the hon. Gentleman’s party did with the mini-Budget.

Our Liberal Democrat policy would take a further 2.5 million people out of paying income tax altogether. While the Conservatives’ proposal would benefit only around 30,000 people, funded through a mini-Budget style approach to tax cuts, our plans would deliver tax cuts to more than 30 million people across the country. Crucially, we would pay for that responsibly through the growth dividend generated by a new growth and defence partnership with the European Union.

[Dr Murrison]

What would the hon. Lady say to her constituents about this subject? I have been looking on Rightmove at houses prices in St Albans, where a very nice but semi-detached house in Carlisle Avenue is on the market for £1.4 million. She has just dissed those people by saying they will not be a priority for tax cuts at the next general election. Can she advise how they should vote?

[Daisy Cooper]

I know exactly where Carlisle Avenue is. Based on the demographic of that ward, I might go and knock on that door and ask if their mortgage went up after the Liz Truss mini-Budget.

We Liberal Democrats are clear: rebuilding our relationship with Europe is the single biggest lever available to increase economic growth, to boost living standards and to cut personal tax. For as long as the Conservative party refuses to acknowledge that, it will remain an anti-growth, anti-business party. We Liberal Democrats know that economic growth is not an end in itself. As we grow the economy, it is incumbent on all parties to ensure that the benefits of that growth are shared widely across the country.

[Paul Holmes]

In the hon. Lady’s view, what would be the greatest thing to increase growth and business growth in this country? Would it be rejoining the European Union, or would it be halving national insurance contributions by businesses for people aged 18 to 24?

[Daisy Cooper]

I can tell the hon. Member that, based on the statistics, the thing that would bring the biggest amount of growth would be having a closer relationship with Europe. He will know that we Liberal Democrats opposed the rise in national insurance contributions, and we have said that we would like to see the reversal of the lower threshold as an immediate move to give businesses back the incentive to give young people jobs, given the crisis of young people not in education, employment or training. That is why our plans link the additional growth generated by a stronger partnership with Europe directly to tax cuts for working people. That is the fair way to help families facing the cost of living crisis, the responsible way to cut taxes and the honest way to pay for tax cuts, unlike the Conservatives’ unfunded promises.

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

Where is the fairness in rightly reducing an earning couple’s tax bill over time so that they can accrue capital and buy a house, only for it to be taxed when they want to leave it to their children?

[Daisy Cooper]

I think we all accept that there are many unfairnesses in our tax system and that there are many tax reforms we want to see for growth. I have acknowledged in my speech that there are unfairnesses in the way that inheritance tax works, but scrapping taxes in an unfunded way is not the way to reform tax in this country, and it is certainly not the way to run the economy. Rather than offering another round of economic fantasy, we Liberal Democrats have a credible growth plan that would make the United Kingdom safer, stronger and more prosperous.

--- Later in debate ---

[Blake Stephenson (Mid Bedfordshire) (Con)]

Madam Deputy Speaker, I am sure that you will agree with me that there are few instincts more human than wanting to leave something behind for your children: a home you have paid for, for over 30 years, perhaps; a farm your grandfather worked before you; or maybe a business you built from nothing. I know that Members on the Conservative Benches know all about all three. On this side of the House, we believe that hard work should be rewarded. On the Labour side of the House, as we have heard over the past few years and today, they simply cannot resist their natural instincts to penalise aspirational homeowners, farmers and business owners.

Let us remember that inheritance tax was once something that only the very wealthiest had to think about. But not anymore. The nil-rate band has been £325,000 since 2009, and this Government have frozen it all the way up to 2031. Over the same period, we know that house prices have soared right across the country. The result is that receipts have hit a record £8.2 billion and the Office for Budget Responsibility expects them to reach almost £14 billion by the end of the decade. Analysis by Tax Policy Associates suggests that by next year around one in five pensioner households will face a bill if they die. That was not in contemplation when inheritance tax was first envisaged.

From April next year, because the party opposite cannot get enough of hoovering up people’s wealth, unspent pensions will also be dragged into the liability. That is not a tax on the super-rich; it is a tax on hard-working constituents right across the country, including those in three-bedroom semi-detached houses where they have raised their children and, as we have heard today, including families in Carlisle Avenue in St Albans, no less.

[Daisy Cooper]

It is fascinating that the Conservatives are so obsessed with Carlisle Avenue. I have just looked up Carlisle Avenue’s local election results from last May: one half of the street is in Bernards Heath ward, where the Conservatives came fourth, and the other end of the street is in another ward, where the Conservatives came fifth. Does the hon. Gentleman think there are structural issues with his party that mean that people living on Carlisle Avenue have no interest in its policies?

[Blake Stephenson]

I am impressed by the hon. Lady’s research between the intervention earlier by my right hon. Friend the Member for South West Wiltshire (Dr Murrison) and her making that point now. I might add that constituents on that street may have been duped by some Lib Dem bar graphs.

Mid Bedfordshire is a rural constituency with many farming families, as is the case right across the country. They were told in October 2024 that the Government were coming for the land that they have worked for generations. Thanks to their hard work, campaigning and pressure from the Opposition, the Government retreated last December and raised the threshold to £2.5 million. Those farming families are grateful for that, but it does not go far enough.

Despite debate after debate in this House, the Government still do not seem to understand that a farmer earning a small yield from land worth millions on paper only, cannot cover the inheritance tax liability unless they sell the land. If the Government would prefer farmers to sell their land rather than farming it, they should just say so. If not, they should acknowledge that the incentives their family farm tax creates are simply wrong. Under their plans, a 20% charge still applies on land that often yields only 1% or 2% a year, but that is vital for them to help feed the nation.

The rules have changed twice in 14 months. A farm or business succession cannot be planned over a generation when the tax rules change every Budget. The same is true of a family business. The engineering firm, the builder’s merchant, the garden centre—up and down the country, great family businesses cannot plan their succession when they do not have certainty in the rules.

--- Later in debate ---

[Alicia Kearns (Rutland and Stamford) (Con)]

There is a principle at the heart of the motion and it is a simple one: what a person earns through a lifetime of work belongs to them and not the Treasury, and that when the time comes, they have the right to pass on what they have earned to the people they love. It is neither a loophole nor a privilege. It is the oldest instinct there is: for people to work, to save and to leave their children better off than they were. That stands in stark contrast with the Government’s approach. The question that we have put before the House is not complicated: should Governments spend less so that families can keep more? The Conservatives’ answer to that question is yes.

In the Mandelson files published this summer, we saw that the Secretary of State for Work and Pensions wrote to Peter Mandelson:

“Every meeting I have is, ‘Who can we tax in order to pay benefits to others’.”

He was right to be exasperated. Some 7 million people—more than 10% of our population—now claim at least one benefit. We will spend over £100 billion on health and disability benefits just this year. A full-time worker on the national living wage takes home £22,500 a year. Someone out of work on credit, with the average housing support and personal independence payment, receives £25,000 a year. We now pay more not to work than to work. However, if somebody has worked and then dies, her unspent pension will now be taxed because of this Government, and the house that she spent her life paying for will be taxed. It beggars belief that Labour MPs looked at those figures, recognised how they are strangling our country, and concluded that they would rebel against the modest reforms proposed by the last Prime Minister. Indeed, the Labour party would rather remove a sitting Prime Minister than attempt to create a fairer system.

I ask Members to imagine that they are farmers in the communities that I serve. You are up at the crack of dawn and working until very, very late. It is relentless every day. Your profit margins are the lowest of almost any industry, but you persevere, because you value your land and your family’s connection to it, and you take pride in feeding our country. But Labour hits you with increased road taxes on double-cab pick-up trucks, increased employer NICs and minimum wage, taxes on fertilisers, the cruel family farm tax, and now a levy on the land itself when it passes from parent to child.

Lincolnshire and Rutland are the breadbasket and agricultural heartland of Britain. We are proud of what we do to feed this country, so it is offensive when the Nature Minister says that traditional rural Britain—the pubs, ale and loyal dogs that we adore—is a far-right fantasy that never really existed. I invite her and any Labour MP to come and visit Rutland, Stamford and the Harborough and South Kesteven villages, because we are not a fantasy; we are communities who deserve respect—although if I came from her constituency, I would also consider it a fantasy to see the type of idyllic life that we lead in our villages. We will never apologise for valuing the traditions and way of life that make our rural communities so special.

The Nature Minister was wrong when she claimed that rural pubs “never really existed”. She would, however, have been correct if she said that she and her Government are doing their best to wipe them out of existence. Under Labour’s plans, the Bertie Arms in Uffington faces a 2,000% increase in business rates by 2029. The hard-working landlady has dismissed the minor relief that came as tokenistic and says that it will make no difference because of Labour’s other tax hikes.

[Daisy Cooper]

I agree with the hon. Lady. The business rates increases under this Government are very damaging, but she will remember that the previous Government also pledged to fundamentally reform business rates and completely failed to do so. Does she understand why businesses across the country are fed up with both the Conservatives and Labour on this point?

[Alicia Kearns]

I am grateful to have the chance to state our record. We cut employee national insurance twice, taking 9 million workers out of it. We raised the national insurance threshold. We abolished the lifetime allowance. We cut fuel duty. We had business rates relief for hospitality and pubs. We did all those things to support our pubs and businesses.

The Prime Minister told the voters of Makerfield that the family farm tax “needs looking at again”, so I wonder whether Members in this Chamber who have given it their full-throated support this week will regret their words in a few weeks’ time. Let us see. Since he took office, Members on his Front Bench have excitedly chattered about reindustrialisation, as if the word on its own builds a factory; it does not, and neither does taxing a business at the moment that it passes to the next generation. From April, the family firms in my communities, such as Rutland Plastics, Coles Plant Centre, Arnold Wills, CS Ellis and Rutland Garden Village, and independent family shops on my high street, like Harrison & Dunn and Walkers Bookshops, will all face the same death tax as our wonderful farmers, like Percy Gilman.

Business property relief existed for a reason—so that a company need never be broken up to pay the Treasury. Those same businesses are not just economic powerhouses in communities like mine, but social powerhouses, as Philippa Wills said to me this morning. They are rooted in our communities and make decisions for the longer term, because they care about what happens to our people, communities and towns. The Government do not care about that; they have broken the social contract between businesses and our young people and those in part-time work, because they have made it so much harder to hire them. Who loses out the most, apart from young people? Women, because it is women who rely on part-time employment when raising their children who are now unable to pick up additional work. That is the true cost of this tax: not the £15 billion a year that the Government forecast it will raise by 2030, but the businesses never started, the capital that leaves, and the women and young people left without jobs.

Tax cuts must be paid for, which is why we have put spending cuts first, but let us be clear. If we tax a family firm at death, the founder sells early, moves abroad or never builds at all. If we tax a farm, the fields go to a solar developer, or they are built on and we become reliant on foreign imports. If we tax the people who work and pay the people who do not, we should not be surprised when fewer people work. We want people to work—we want them to be able to celebrate and benefit from a lifetime of toil and hard work. That is human nature, and nothing to be ashamed of.

We have a Government who are asking who they can tax, and an Opposition asking how much more people can keep. Labour’s assault on farms and businesses, its insistence that rural life does not exist, and its addiction to spending will destroy this country. We want people to succeed, and we hold our rural way of life close to our hearts. That is why everyone must support this motion today.

--- Later in debate ---

[Dr Shastri-Hurst]

I recommend that the hon. Gentleman get on the Clapham omnibus, because it is a great opportunity to have his finger on the pulse of the British public. I think most will say that they want a fair system so that when they have worked, strived and built up a legacy for the next generation, they have something to hand down, because that is the most loving thing that people can do. I have not built up a family business or run a family farm, and I cannot imagine the stresses and strains that that involves, but these individuals understandably want to hand their businesses down to the next generation. We need them to do so, because if we do not have the farmers of tomorrow and the generation after that, we will not have on our tables the food that we enjoy today and that we hope our children will enjoy in years to come.

[Daisy Cooper]

Was the hon. Gentleman sticking up for farmers when his party negotiated trade deals with Australia and New Zealand, which undermined farmers in the UK?

[Dr Shastri-Hurst]

I fundamentally do not agree with the hon. Lady’s point, and I suspect that farmers in this country will be wondering why her party has not stood up for farmers over fertilisers today.