UK Conservatives to call for inheritance tax cut

LONDON, Aug 16 (Reuters) - Britain's opposition Conservative Party will recommend on Friday the abolition of inheritance tax and the reduction of stamp duty on shares and property as it seeks to regain momentum after a slew of bad poll results.

A Conservative policy group that has examined Britain's economic competitiveness will also argue the case for lower income and corporate tax rates when it unveils its proposals.

But the group will stress the party will take no risks with stability and will decline to give detailed, costed plans.

"No policy would be recommended or implemented if there were a serious body of expert opinion that it could in any way endanger economic stability, and thereby lead to an increase in interest rates," said a briefing note distributed ahead of an announcement by the Economic Competitiveness Policy Group.

The group, chaired by right-wing Conservative lawmaker John Redwood, will back a reduction in corporation tax to 25 pence in the pound from 30 pence.

It will argue that "the evidence of lower marginal rates of tax on income and profits is overwhelming," citing Ireland, the United States and eastern European countries.

Inheritance tax -- which has hit more and more Britons with a rapid rise in house prices -- should be abolished while capital gains tax should be reduced, the group will say.

Redwood will say abolishing stamp duty on property would not be easily affordable during the first years of a Conservative government but that "early action should be taken to abolish or reduce the stamp duty on shares".

Stamp duty on homes should be cut later, the group will say.

The plans are not official party policy but they are said to have support from leader David Cameron who may pick from them to draw up his party's election manifesto.

Friday's announcement will also reiterate Cameron's policy on "sharing the proceeds of growth between tax reductions and increased public spending," the briefing note said.

The announcement is likely to reignite debate inside and outside the Conservatives over tax cuts, with Labour poised to accuse the party of lurching to the right by offering unfunded tax cuts.

The policy group said it would not present fully costed proposals, arguing that would be unwise so far ahead of a first budget.

Cameron's Conservatives are lagging Labour by as many as 10 points, recent polls show, after the arrival of Prime Minister Gordon Brown on June 27 bolstered Labour's ratings.

Brown does not have to call a general election until 2010, but there is growing speculation a poll could be held as early as next year.