The crux of the idea seems to be here:
"Under the proposal, every individual would be given a lifetime tax-free allowance of £250,000. Transfers received beyond this allowance would be taxed in progressive bands of £250,001-£500,000 (20%), £500,001-£1 million (40%) and over £1 million (45%). Small annual gifts below a specified amount (not identified in the motion but identified as £3,000 a year by a spokesperson during the debate) would be exempt and not count towards the lifetime allowance, as would spending on a child’s education and transfers to spouses and charities."
Seems that you can gift £250K tax-free to an unlimited number of beneficiaries, so even a multi-million pound estate would escape taxation, given that you have a sufficient number of recipients. That seems like a generous loophole given that the current nil-rate band is £325K to £500K per estate.
No longer forgiving CGT upon death makes the proposed structure worse, perhaps, although if there continues to be no CGT on primary homes and ISAs then that can be mitigated.
The bigger problem I have is that right now there is no requirement to report or disclose gifts at all. You may make them at will, as many as you wish, to as many recipients as you wish. There is a requirement to retrospectively report them if you die within 7 years and IHT would be due, but not otherwise.
So such a change would require some framework to report gifts as they happen. And I can see loopholes there, at least for gifts that don't create a paper trail. So UK share and property transfers can be discovered, but gifts of cash, valuable objects, precious metals and gems and non-UK assets would be very difficult to track down by any third party.
My own view is that if we wish to go from an estate tax (which is really what we have now) to an inheritance/recipient tax, because it is seen as fairer, then that should be a revenue-neutral change rather than a rather blatant piece of confiscation.