Labour adviser admits Rachel Reeves may need to launch raid on pensions for cash

Labour may need inheritance tax hikes or to raid pensions in future, a tax adviser to Rachel Reeves has admitted.

Sir Edward Troup, who advises the shadow chancellor on how to improve tax compliance, suggested pensioners should be taxed “at least as hard” as people of working age.

He also said the next Government will need to consider a rise in inheritance tax.

Sir Edward told how the Opposition party's promises not to raise income tax, VAT or National Insurance means they will have to look at other ways to raise cash.

The former HMRC Permanent Secretary said the levy rise “will have to be on the agenda and will be unpopular”.

Sir Edward said pensioners who have capital gains should be taxed “at least as hard” as people of working age.

He said: "Both political parties have ruled out increasing the rates of the main taxes, so if the incoming government does want to raise money and the indication is that they will have to, one way or another, then they really do have to look at the smaller taxes.

"And inheritance tax, it's not a tiny tax, it's a reasonable size tax and so inheritance tax will have to be on the agenda.

"But it will be unpopular and the amount that can be raised, even by quite radical changes, is not going to make the difference between problems with the public finances and solving the problems.

"If you wanted to look at ways of raising money which don't affect the economy, which obviously income tax and National Insurance do, then inheritance tax ticks a lot of boxes."

The Labour Party said: “These are not Labour party policies”.

But Labour has repeatedly dodged questions on whether it would hike inheritance tax or other levies if they get the keys to No10 Downing Street on Friday.

But Darren Jones, the shadow chief secretary to the Treasury, told a public meeting in March that funds from inheritance tax should be used to address “intergenerational inequality”.

In a recording, Mr Jones - who will be responsible for public expenditure if Labour wins the election - said there is a “bulk coming through the system of huge amounts of inherited wealth”.

A Labour spokesman said: "This is total nonsense. Nothing in our plans requires any additional tax to be increased. We have set out fully costed, fully funded plans, with very specific tax loopholes we would close.

"We have said very clearly that our interest isn't in raising taxes – our priorities are economic growth and making working people better off."

Inheritance tax is currently charged at 40% on the value of estates above £325,000.

Up to 6% of estates are set to be subject to the levy by the end of the next Parliament.

Bim Afolami, Economic Secretary to the Treasury, said: “The British people don’t just need to take our word for it on Labour’s tax plans – just listen to what Rachel Reeves’ top adviser said today, when he confirmed Labour will reach for the tax lever the second it gets a chance.

“If Labour are handed a supermajority on Thursday, they will have no one to stop them hiking up your taxes. Do not surrender your home, your car, your pension, your savings or your children’s education to Labour’s tax raid.

“Just 130,000 votes across the country will be enough to stop Labour’s supermajority. Vote Conservative on 4 July to halt Starmer’s tax raid.”

Meanwhile Sir Keir Starmer arrived in Scotland after flying from Wales on the same jet that took England to the Euros in Germany.

The Labour leader sat in the same seat as England boss Gareth Southgate for the journey, part of a whirlwind tour of mainland Britain on the final day of the general election campaign.

By the end of today, Sir Keir was due to have visited 57 different seats over the last six weeks, including 43 being defended by the Conservatives

As he began the final day of campaigning, Sir Keir told activists in Carmarthenshire: “We’ve now had 14 years of chaos and division and failure, and the choice on Thursday is to bring that to an end, to turn the page and to start to rebuild with Labour.

“I’ve been saying throughout this campaign that if they are returned on Friday for five more years of the Tories we won’t get anything different, it will be the same.”