Raising IHT threshold to 1million.(26 Posts)
Not a Tory but I actually agreed with this. Inheritance tax was originally envisaged as a tax on the rich but the problem is that the threshold hasn't been increased with inflation each year. More and more middle class people are having to pay it - particularly with house price rises in London and the South East. If it had gone up with inflation it would be well over £1million. Surely you need to have at least a million in this day and age to be rich.
Moknicker….as you say, due to UK inflation, particularly high versus the rest of the G7 countries over this new millennium, the ‘under indexing’ of the inheritance tax level effects more and more people, around 1-in-20 now, 1-in-10 over the next several years – and clearly if pensioners don’t give their pension pots over to annuity providers, a raise makes even more sense.
One observation I heard this morning re property put this into context; in London a one bed roomed flat can now be worth £320k, it doesn’t make you ‘rich’.
And as the article you provided above mentions, this is not a new policy, this was a Conservative policy back in 2007, put in their 2010 manifesto, but was another promise lost within the Lib Dem coalition agreement.
2007; “The threshold for inheritance tax would rise from £300,000 to £1m under a Conservative government, George Osborne has told the party's conference."
"Stamp duty for first-time buyers on homes worth up to £250,000 would be scrapped, the shadow chancellor added.”
A rise in the inheritance tax threshold, especially after a pension reform that means pensioners may keep control of their own money, is joined-up-policy thinking, and whether Miliband’s Newest Old Labour CURRENTLY supports Osbourne’s new pension reforms, BEWARE Labour’s opposite joined-up-policy thinking on pensions. This devastating raid was NOT mentioned in their 1997 manifesto.
And in the current cross party agreement on old age health care provisions, which party was more in favour of confiscating pensioner’s wealth on death?
You don’t have to be a Conservative to think this isn’t fair to the pensioners who would have paid tax on their earnings, tax on the majority of their savings all their lives - and now tax on taking control of their own pension rather than buy an annuity – so a death tax on top, would be totally over the top and Labour should declare their intensions on this from 2015.
And you don’t have to be ‘rich’ to benefit from wealth being passed down the generations, as every little helps, whether struggling to pay off a credit card bill, or saving for a deposit on a home - and the majority of pensioners would take comfort knowing that they would have helped loved ones in that way.
Thanks Isit. I too think it makes a lot of sense and Im a bit bemused at all the outrage about this.
The other point is that most rich people would probably have a lot of tax planning in place to minimize their tax bill and it is the middle class who will accidentally get caught in the net.
Moknicker...I guess those complaining are those who think that the State should tax a persons loved ones to beyond the grave, and believe that the State can spend the money better than those who inherit it.
No doubt in their minds some Quangocrat apparatchik on £100k a year, providing their children to a private education is more deserving, as that seemed to be the priority of the last government, certainly not lowering taxes enough to take lower paid people off of Tax Credit dependency and income taxation all together.
Yes the rich will have their tax planning well sown up, and it will be the middle classes and many working class people who could have accumulated basic assets like a home and pension during their lives, who get caught up in a £320k IHT trap, as most people don’t even want to think about it.
I’m no expert on Wills, but I guess with a £1 million level, they could die intestate and the persons estate distribution remains a FAMILY problem, not the money grabbing, inefficient, fat clunking fist of the State.
A step in the right Direction, of course the rising of the threshold was in the original Conservative Manifesto for the 2010 General Election.
On another thread, I said I thought Inheritance tax was an Amoral and a totally pointless tax, and that with its present threshold of £325/650K it just penalised "Successful " professionals Teachers/Doctors and Local Businessmen and their offspring ( Most of these Families have never claimed one Penny in Benefits).
The Raising to 1 Million Pounds though a positive start, ( Will be rounded on by Labour, Vince Cable ET.C) it still does not readdress what Inheritance Tax was originally planed for. In today's United Kingdom , if the threshold had stayed with inflation in house prices and Business values ( To make the Richest 5000 Families pay or so) The Inheritance Tax threshold would be closer to £ 5 Million . However I personally think it is wrong to Tax people on tax paid Money ( Why Cant someone give their tax paid Money to who they like). The Money would be spent in shops, Services and would still all go back in to the economy.
I think it is to create an illusion to those of a Socialist persuasion, that the "Rich" ( though why anyone should think £325K is Rich is beyond me).
Inheritance tax does not make the poor richer , it just takes money out of the economy.
Isit will be aware of Margaret Thatchers farewell "Prime Ministers" Questions when asked a question by Simon Hughes about the huge disparity in wealth between the richest and poorest , Maggie pointed out to Simon Hughes that Socialists only see the gap in numerical numbers not in facts . "Socialists" would prefer the rich to be on 5 and the poor on 1 rather than the rich on 9 and the poor on 2. The socialist argues that is better for society ( surely the poor is better on 2 though the gap is 7 rather than 4) This of course explains that Child Poverty actually fell in the downturn of 2008-2011, ( Or by the blunt instrument of comparing Relative poverty related to the Medium Wage or affluence).
I totally agree, as evidenced on this board, with socialists it is a numbers, unworkable economic theory and ‘some other country does it better than us’ rhetoric, I used to think was needed to cleanse their memory of their own party’s abysmal record – but now I think they actually believe it, even when you prove them wrong e.g. Gordon Brown’s pre 2007/8 reckless spending contributed to the budget deficit/economic downturn.
Someone correct me if I am wrong, but for all the books written about ‘inequality’, generally speaking, in a mature western economy, when the economy is going gangbusters (a ‘boom’ in Brown speak), inequality always RISES, and in any honking great recession (a Brown ‘bust’) inequality falls.
So we should all pray for a perpetual economic ‘bust’, where the standard of education and private sector jobs are unimportant, where the cost of benefits to whoever wants to claim will continue to be unlimited, whether a country has a £157 billion 2009/10 budget deficit or not – and the numbers on inequality remain narrow - so everyone MUST be happy and prosperous.
And there we have socialist Utopia, successfully modelled on a country far, far, away that no one can name. God help us.
I dont agree with a no IHT at all stance. When you get to high levels of wealth, it is usually via unearned income for eg, house price increases, share price increases etc. I am only questioning the level that it now kicks in because at 325k the govt is clearly hitting middle earners.
I think it is worse to be in a widely unequal society than one where the disparity is not that great. Unequal societies have a lot of unintended consequences like higher crime rates, mental illness etc.
Yeah, yeah, hear it all before so won't be holding my breath.
Maybe all the main parties (& Ukip) will put it in their manifestos, as that way whatever party or coalition comes to power in 2015, one way or another IHT will rise. Simples.
ISit. First of all , I must say despite our slight Differences, Claig, You and myself, are the only three people on this site who "Are not "SOCIALISTS".
On another thread discussing this, one poster has advocated 100% Tax on all Possessions ( Even Tony Benn , did not advocate that) I wonder if Hilary , will pay Inheritance Tax on Tony's House in Islington or was it Passed on with time to spare.
Someone suggested , the idea that the South should have a higher threshold than the North. "Cheekily" I swapped that Theory Round, stating that if Poorer northern areas had no Inheritance Tax money and business would relocate to those areas. This would eventually reduce the North/South Divide as richer people moved North. This was a "Joke" but thinking about it, it is thinking out of the box with radical ideas that will help the Country. Not "David Blanchflower" who would actually like 6 Million people Unemployed , to say " I told you so" and must wake up , each morning wondering when is it going to happen. Sorry David despite you PHD from LSE , even me with my Grade D Gcse Economics , cant be fooled by your nonsense.
I'm not a bloody Socialist either. I cannot believe the left-wing bias on that other thread about IHT. the green-eyed monster in full flow. I had to walk away from it.
I sometimes think that MN is really too left wing for me. It certainly isn't representtaive of the opinions expressed nationally to polling organisations.
First of all on this board, I’ll take “slight differences” every day of the week; there is a lot of passion on many subjects and I like that, it usually results in a decent quality of debate.
As to the political bias of this board, that surprised me too, I’m guessing that those not of that view was either bullied, or otherwise forced off by the sheer weight of inaccurate bullcrap over the years by a few characters here.
And I like that too, as I can add a bit of factual/qualified political and other balance, also open to others debate, but it appears that those who have given themselves a social headscrew many years ago go M.I.A. when it’s not want they want to hear. Happy daze.
As to the political bias of this board, that surprised me too, I�m guessing that those not of that view was either bullied, or otherwise forced off by the sheer weight of inaccurate bullcrap over the years by a few characters here.
That's the same on all of these boards. If you don't agree with the consensus, you're bullied out.
I'm definitely right of centre, and whilst I'm not entirley comfortable with inheritance tax (I don't trust the governement not to waste the money) I'm even less comforatable with intergenerational wealth. I say that as somebody who is likely to benefit from an inheritance.
Contrarian. I have read some "bizarre" Ideas , on the other thread .Apparently if you win the Lottery 100 Million, you should not pay tax , but if your parents leave you the "Family Home" you should pay at least 40 % some have even suggested 100% of the Value.
These people are the same people that on a thread about winning "Euro Millions" said that they DC would still go to the "local Comprehensive "Remember ( Jenny from the Block). It shows a total lack of understanding , and Stupidity .
To think that many of them have Degrees and PHDs, its Frightening . Honestly you would hear more sense from the Average Sun Reader.
Every Government will waste the money that they rob from your "Families" Estate .
Contrarian. It is a question "What is Wealth", Everybody has a different definition of what is "Wealthy".
True there are Families in the United Kingdom who have had Great Wealth £100 Million plus for generations. These Families though are far removed from what we are talking about here.
We are mostly talking about "First Generation Families " that are the first in their families history to have ever been able to leave something to their offspring.
Many of these families " Mothers Fathers/ Grandparents grow up after the war , worked very hard in trying circumstances , starting Business Studying hard and making sacrifices for their families. These families are linked to "Poverty" and Poor Working Class, though the generations, the difference though is that the Fathers/ Mothers and Grandparents had Aspirations to better themselves.
To me, wealth is anything which isn't income. As to where you set the bar, that's open for debate.
Those truly wealthy families who have amassed serious wealth (with the help of trusts) have done so becasue they were among the first property owners. I can foresee, within a generation or two, your chances of owning a property will be largely dependent on whether or not your parents/grandparents/great granparents owned theirs. That makes me uncomfortable.
I'm absolutely in favour of a meritocracy, but the field has to be (broadly) level for everyone. We'll never have equality in this country, but we should certainly have equality of opportunity.
With regards to the Euro Millions winners, the money will form part of their estate and be subject ot IHT, or it'll be given away and find its way into the economy (that's why I'd sooner see prizes capped but distributed to more winners)
Wealth is the value of assets owned by an individual.
I think you're quite right about the home ownership issue Contrarian. The baby boomers and their parents were probably the first generations to own their own homes and lived through decades of huge increases in house prices. So many of my friends (mid-30s) cannot afford to buy property and can't see themselves ever being able to.
I'd like to see the IHT threshold raised in line with property prices but not to £1million.
Contrarion…speaking from experience, I think that “equality of opportunity” is very over-rated.
We were so relieved that we got our three children into a great state school, as we provided for them an excellent life opportunity for them to grasp with both hands, and they blew it – and although we encouraged them to both use the intelligence god gave them and pointed out the point of a career and costs of living in the real world, it made no difference. So my regret is that someone else’s children did not get that ‘opportunity’ in their place, so life isn’t ‘fair’.
To my mind the greatest levellers of opportunity are education and a work ethic; where those from the middle and working classes might take longer to accumulate the ‘nice’ things in life than those with the silver spoons (who often implode all by themselves), they can get there.
State school pupils 'do better at university'
My point (finally), is that while the standards of our education system will vary, until the vast majority of our children at least try their very best to help themselves at school, and then take that work ethic out of school into a career – who dare say that those who have become ‘the haves’, should be brought down to level idiot, who thought school was just a social club – like my loveable but apparently ‘well rounded’, idiots?
Unfortunately the majority of careers will not put a down payment on a silver spoon for junior, but to many their ‘wealth’ will be in doing what they want to do until retirement, often facilitated by the qualifications obtained by taking an education seriously and having a good work ethic.
Whatever, as the state does its best to tax you at every stage in life, I’m with motown 3000 on this, there is a huge difference between, lets call it Old and New money.
If some Head Teacher has managed to accumulate wealth through assets i.e. a home and even life insurance, the (usually inefficient/over spending) State, often claiming on behalf of the self made, poor, and demanding idiots who chose to fall through the education/work ethic system, should back off and let that wealth be passed on as the person who accumulated it, wishes.
It'll be the children of those baby boomers
I'm one of them (in their mid-thirties) who will eventually inherit. I struggle though to see why someone that can afford rent, cannot afford to buy. Sure, people rent for all sorts of reasons, but whenever I rented, it was more expensive than a mortage on the same house would have been.
I'd be in favour of an 85% inheritance tax
If I thought the government could be trusted to spend it What would actually happen is that people would spend their wealth (or give it away) prior to death. Keep the 7 year rule though.
I agree with much of what you're saying. Equality of opporutnity is an aim. I know it will never exist, but I think it's preferable to simply having 'Equality' as it provides for a meritocracy.
I hate govenrment interference generally, but just not as much as I hate the idea of living in a world whereby your life chances are determined prior to your being born. Those of us who are fortunate enough to be able to live comfortably already give our children advantages (rightly so). I just don't see the need to stack the deck against anyone any further than that.
Contrarion….wow…an 85% tax on anything to me means we ‘the people’ shouldn’t bother working too hard to achieve anything; what is the point of those taking risks to work hard or build the businesses/hire people to pass on 15% of their life’s work to their family - who may have to sell their Country Seat/main home, to someone whose still alive with the same wealth.
And I don’t see how giving it away to those we love before death, whether we can accurately pin our mortality down to any 7-year life expectancy window or not, is much different to giving money to them via a Will, a few years after.
UK tax history over the last 40-odd years shows that penal taxation brings in less revenue, and personally I find it obscene when the state takes more than is earned/given e.g. over 50%. And I guess I’m not alone, as that is why penal taxation raises less, as out of principle those with real wealth/options do whatever they can NOT to pay those penal rates.
And there will always be people passing on advantages in life to their children, even if just well paid apparatchiks of the State,riding around in black limos.
Maybe the only real equality means that we should all wear little green suits, work in little cottage industries like smelting outside the front door, eat whatever we can find on the floor and ride bicycles everywhere – it’s been done before, didn’t work out too well for 20 odd million who were too clever by far or didn’t get enough to eat - but at least our conscience will be clear re ‘advantages by birth’.
The things is, I've amassed more than my fair share of wealth. I'm by no means wealthy, but I am 'comfortable' Everything I have, I've got by working hard. I would hate for my children to be denied that opportunity and the sense of worth it gies me. Already my expectations are that much higher for them as they've had advantages that I could only dream of.
My children could expect their inheritance to be really rather substantial
especially if my wife and I inherit from our parents but instead they'll be left with three quarters of f*ck all, as my wife intend to enjoy the fruits of our labours. Perhaps that's why I'm intensly relaxed about IHT.
I'm not a commie, and if you want to leave wealth to your children then you can (it's yours to give away) I just don't see that there's anything wrong with a tax that prevents unearned wealth accumulating.
"Still" the other thread goes on. If you were to take a poll away from this website and ask people ( Most of them being unlikely to receive ) more than the Inheritance Tax Threshold.
Should People be able to Leave their Wealth / Assets to who they like without a DEATH Tax being levied on ?
I can guarantee , most people would say "OF Course" people should not be Taxed on their Legacies . " Most Non University Educated People ( Except those who are Green with Envy or have bought in to Socialists Lies agree with this.
"Some" people who come back from University, get "Bamboozled" by Theories such has taxing Moderately Well off People to an "Inch of their lives" will some how make Poorer people better off.
The Socialists pedal this lie to " Naive" well meaning Academic Students, who are taken in " Hook Line And Sinker" and believe this shit.
My politics are right of centre. I've been educated to beyond degree level. I'm not particualrly in favour of taxes, nor am I in favour of the State controlling every aspect of our lives. I'm just not really in favour of intergenerational wealth either. My inheritance (if I get it) will likely fall in scope of the existing regime (but not the proposed �1m) and I'm not really bothered.
The only argument I can really think of against inheritance tax is that the government doesn't spend our money effectively.
I don't think "£325K" is "Intergenerational Wealth".
Intergenerational Wealth is what you see in The South of France , where £325k Buys you a "Riva" to take you ashore from your Ferretti 960.
Just because it suits Socialists , to make their followers believe Someone/Family who Inherits a 4 Bedroom Home is a Rich Bas**, does make it the truth.
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