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.

Pinkfrocks, assuming you have managed your money well there will be no iht due on a £650k house.

The upper classes (which I'm not I am from immigrant parents) in the UK all live on one estate. It's not massively unusual. We have worked very hard and been lucky to have a superb home and land. I cannot envisage my children ever having the money to buy something similar. I think that's unfair. The only way round it is to gift them the house when they are old enough and hope they or their partners don't kick me out and I live another 7 years. Failing that it is sold on my death and the treasury gets a windfall. Yes the children will also benefit but the loss to them is their home.

having done some reading up on this, I'm not sure why people are saying that it's the wealthiest 2% who will benefit from this. Govt figures are quoting 6 - 12% of people whose estates fall into the category, largely due to house prices. (This is obviously still a minority, but that number then starts to include people with very little money/assets, except the house they live in)

The govt are also saying that they'll tax higher rate pensions to compensate - so the higher earners will pay more tax, but the 'working poor' (people who have one home, worked all their lives and now are in a house that has increased in value) will pay less tax.

Those of you saying that people living in relatively modest houses worth a lot can sell and move somewhere else and have that cash (whether the person themselves, or anyone who benefits from the will) - are you really suggesting that the way to resolve economic discrepancy is to effectively evacuate the SE, and relocate about 200,000 families?

I'm NOT in favor of the Tories, I am happy to pay taxes, but a policy of anyone aged over 60, with a 3 bed semi or larger, leaving the SE to live elsewhere is utterly ridiculous.

Pink - I live in the south. Very very few people who live in social housing are going on cruises and buying new cars.

It is not unearned capital gain. Most people have mortgages that they pay for our of their already taxed income. They improve and maintain their homes out of taxed income. Most people's homes require significant financial investment which should then attract a reward or sometimes depreciates. The value of the property is taxed when they sell it if it is not their main home and by the stamp duty paid by the buyer which they also paid when they originally bought it. They have also probably paid VAT on repairs to the house and the furniture and decor.

Pearson there is no need to assume that. IHT is also one of the easiest taxes to avoid (with a bit of luck). There is a link up thread to a guide on (I think) moneysupermarket.com which explains this.
I have every sympathy with your view and we are taking steps to ensure that no IHT is payable on our family's house. Again it's a modest property, but it's in the SE so has increased in value massively.

Pearson its fair and right because they did nothing to earn the 'wonderful' house you live in. How is it fair or right that they should have the financial benefit from owning that house without paying the due tax as well as the (probably bigger) benefit from growing up living in a wonderful house? I have no problem with people having stuff they have earned. Your children have not earned the privileges you wish them to be given free and clear. Paying the tax (not even 50%) is their contribution towards 'earning' that privilege.

Why are people always looking for handouts for their kids? Whatever happened to working for what you get?

The upper classes (which I'm not I am from immigrant parents) in the UK all live on one estate

No they don't. Traditionally younger siblings have to bog off and be a vicar or join the armed forces or marry somebody with money.

Anyway, downton abbey is hardly a model for how we should all live. Far more practical to have a society where children are enabled to look after themselves.

Hello kickass I think you've missed the crucial fact that the person is in fact dead. That is the point of this tax. It is on inheritance. The only place they will be moving on to (fingers crossed) is heaven, assuming there is one.

I cannot envisage my children ever having the money to buy something similar. I think that's unfair.

There are so many things wrong with this.

Firstly - they are more likely to be able to afford 'a superb home and land' if the property bubble is deflated. increasing the IHT threshold will not deflate the property bubble, it will add to it. So there;s that.

Secondly - perhaps if they were;t sitting back expecting to inherit superb house and land they might find themselves better placed vis ability to buy their own place instead of relying on handouts from their parents.

Thirdly - Most people's children won't be in a position to buy a superb house and land unless the property bubble is deflated. Why should your kids (who apparently despite the manifold advantages of a privileged upbringing are not in a position to shift for themselves as most other people have to do) get something handed to them on a plate when they clearly have not only done nothing to deserve it but have squandered the opportunities life has already offered them?

Pearson - incidentally if you gift them the house but don't move out they will still have to pay tax anyway because the taxman will see it for the dodge it is.

Black rider - in our case we spent a fortune building a property. We added great value to the land/existing house. I added value. If it is a fair tax as you claim there should be no threshold and it should be 40% of every pound not only that over £650k. If the tax applied to all, I do not think there would be so many vocal supporters of it on here.

I find some of the rhetoric on this thread rather strange. I understand that a gain in property value is not strictly "earned" by the beneficiary, but surely that is true of any capital gain. The homeowner has still risked their own capital. It is also true that most benefits received from the taxpayer/state are not "earned". So what?

Gently Benvolent - assuming you have children I expect you give them the best you can? You want the best for them? You want them to have a happy life? You want them to do better than you have? I want all this for my children. My parents came here from abroad with nothing. I went to a very ordinary school, worked incredibly hard to get qualification and a good job. I don't want my children to struggle like my parents did or I did. I want them to have a leg up in life because two generations of their family worked 18 hour days, 7 days a week so they had more than we did. I want them to work, I want them to have a happy and easier life than I have had. I don't see what's wrong with that.

You are taxed on capital gains when they are realised. As with iht this is more because it is more efficient to tax people when they have money than when they don't than because of some objective concept of fairness.

Most homeowners risked the bank's capital not their own...I certainly never had any capital, my first mortgage was 100%. I allegedly now have well over the current IHT threshold in equity in my house (although not over the combined threshold) but obviously it's unrealised (and I have my doubts as to whether it is actually fully realisable). I have done nothing to earn that increase in value, my presence in the street didn't cause the house prices to go up, fabulous though I and my family (and especially our cats) are.

Pearson, I don't know but would guess that many people move to the uk because of the benefits of living in a country with stability and a strong infrastructure where all children are guaranteed a minimum level of education and healthcare.

This is all possible because of taxation.

Pearson I want my kids to grow up in a fair and equal society that they aren't ashamed to be part of. I don't want them to take advantage directly at the expense of others and I don't want them to dodge their commitment to society and to a fair tax regime. I want them to be decent people not greedy grasping people with low levels of financial literacy.