What are the Tories thinking with insane £1,000,000 inheritance tax threshold proposal for family homes?

[Figmentofmyimagination]

It's almost as if they have completely lost their way.

How bizarre to say that I'm stereotyping - I know nothing about you but did assume that you might have kids given the forum - I do apologise.

I might say that you have also made assumptions or stereotype when you say that if someone lives in a million pound property they are wealthy.

I don't plan to argue with you - just simply trying to explain why I think it is an unfair tax.

We will have to agree to disagree and on that note I'm bowing out

yes, merrymouse, more commonly that would probably be the case. I guess my son is just collateral in the war of the perceived have and have nots.

needsome in some cases where an adult is dependant then I think an exempt trust can be set up which allows them to live in he house with tax being due only when they die.

It's not an argument against IT in principle. Why do you think IT is less fair than income tax?

Or I guess if that doesn't operate in the case of your son he could sell a house and have enough for a downsized flat in same area.

I'm confused by everyone saying that you've already paid tax once (when earning) and shouldn't have to pay tax a second time (through IHT). The taxes are paid by different people - first by the original owner and then the one who inherits. Also, much of the value, if it derives from property, has not been taxed at all, it was probably accumulated by the sheer luck of owning a property during a property boom. Finally, taxes aren't levied so much on money but the movement of money, so talking of something being taxed once and then taxed again many years later when it is changed from one form to another doesn't strike me as logical.

Personally I think IHT is a good tax. It is genuinely progressive in that it falls more on the wealthy than the poor (as opposed to, say, VAT). You also only pay it when you're dead - I'd rather money was taken from me for the good of the nation when I was dead than when I was alive and able to enjoy the asset. And the recipient already has a huge amount that comes to them tax free. £345,000 is about 14 years worth of the average UK household's income, and you get all of that untaxed. Above that it is only at 40%, so a person inheriting an estate of £500K still gets £438,000. Personally I wouldn't baulk at receiving that much, especially as I had done nothing to earn it, except perhaps sort out the probate process. The only problem I can see with IHT is it's voluntary nature, in that it's easy to dodge.

The only people who I can see who would be opposed to IHT are those with wealthy relatives who are waiting for a windfall when they die off.

No your son shouldn't be collateral damage. However there is nothing stopping any party from changing legislation to protect people genuinely left homeless by iht - but that is not the point of this proposal.

The argument against inheritance tax with regards to disabled children is slightly fallacious.

If your disabled child is in receipt of government benefits, you'd be insane to leave them anything much at all. I won't be leaving the same to my disabled child as to my non disabled children because I don't want his benefits to be affected, or at least what I leave will be left very carefully in trust for him with one eye on his benefits.

Depends how much care he needed.

A million quid would go nowhere in the case of my son with PMLD after buying a house, adapting it, staffing it...

Yes that is the case whatever. I'm just saying IHT shouldn't be the difference between a disabled cld staying in their family home or not.

It's a separate issue to be honest. What you do with your dependant disabled child when you die commonly invokes fury and 1000 post threads on here...

needmorespace I do understand where you're coming from - I am totally in favour of a system where your DS gets all the support he needs to live as independently as possible (my DS has a genetic condition which has caused some physical disabilities, some LDs, and some autism-like symptoms for good measure).

But in order for that system to work, it needs people to pay in where they are able, so I am in favour of IHT.

I would say, though, I wouldn't want DS to own this actual house if DH and I were run over by the proverbial bus, because there is so much maintenance and upkeep and so on. T'would be better for him to take his share of the cash (minus tax where appropriate) and rent a flat with maintenance included. And he'd still need a responsible adult (hopefully his godfather would step up) to phone the landlord if the boiler broke etc.

All this "have to sell the family house" stuff - someone has just given you a free house. If you want to hold onto it, take out a mortgage for a small part of its value and pay the tax.

Inheritance tax is one of the very few taxes that economists who lean both left and right agree on (that it's a good thing). See Irwin Stelzer or Will Hutton

All this "have to sell the family house" stuff - someone has just given you a free house. If you want to hold onto it, take out a mortgage for a small part of its value and pay the tax.

I do think that people are losing sight of the fact that even after inheritance tax they are often getting huge sums of money, amounts that most people can only ever dream of. Most people, if they are fortunate enough to own their own home and that is a shrinking group, have to save up and pay of their mortgage. If my children inherit the property that we own they will not have earned that, they certainly will not have earned its increase of value ( even we did not earn that) and therefore they have no real claim over it, It is a lovely bonus that they will be given money as a result of our good luck to be ones of the few people who were fortunate enough to be able to buy property.

My husband and I will not financially plan to avoid inheritance tax, we hope that our children will have the grace to acknowledge that they have already had more than most and therefore they can find their own way in the world with a little help from us, rather than having everything handed on a plate to them. I also hope that they realise that the state has paid a lot for them over the years and therefore it is only right that they pay back in rather than expecting those with less to do so.

I don't get this 'somebody has given you a free house'. The house has been bought and paid for by the relatives of the person who inherits.

Great post philoslothy. If only more people would think like this!

Would work for us. My Ps paid £15,000 for a house now worth £1m+. It's their only security.

Whether or not it is a 'free' gift it is even less clear why (dependants aside) it is a 'family home' to the beneficiaries who, with a bit of luck, could be in their fifties and sixties when they inherit.

I think it's possible to argue that family structures have changed and current legislation is unfair on people who aren't married. However if anything the Tory proposals increase that difference.

You can argue the toss about whose money it is, but even after tax a large amount is left over (see many calculations above) and giving people more money will not calm property prices. In terms of stupid property prices it leaves everyone back at square 1 - except people who have no south east property inheritance who are even further back.

Cuts for the poorer, breaks for the richer. Same old shit as always.

How about we abolish IHT and just tax inheritances as income, which they are

Scnitzel: that is a good idea.

I assume legacies left to charities are Gift Aided? Or come off the estate before the IT calculation starts? Like funeral costs and the costs of managing the will?