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.

Black
Nearly £500k of unearned wealth from property inflation (£160k > £650k) is not 'managing your money well'. It's luck. An unearned capital gain.

No it's not luck- it's supply and demand.

At the same time that we paid that for our house, a friend paid £450K for hers in London. It is now worth £3Million.

Part of the property boom is because the Russians, Arabs and Chinese are buying up London and the ripple effect means that the Home Counties have seen huge increases in house prices because young professionals can no longer afford to buy in London.

Gently You make some basic errors with your comments.

Young people won't be able to have the same assets because a) they can't get mortgages in the SE due to the price of homes, b) they have to buy themselves pensions and c) most of their inheritance (if it's not gone on nursing home care) will only be theirs when they are over 60 because my generation is living until their late 80s.

I live in the SE and most of the people living in social housing in my town have newer cars than mine because they pay a pittance of a rent compared to their earnings. They also have more expensive holidays.

Merrymouse it appears the social contract has been not so much broken but smashed by some people...very very sad.

figment - I was responding specifically to an earlier post suggesting that the home owner could sell up and move somewhere cheaper to give themselves some cash, before their death, as well as comments that the recipients of an inheritance could do that.

My points isn't that there should be no IHT, but that assuming someone with a house worth 500k is in the top 2% of the nation's wealthiest isn't accurate.

Sadly, house prices are so high that there are many people who own a property worth 500k or more, without having come from some background of incredible wealth and privilege. There seem to be some people who are thinking that "well they're super wealthy toffs with a silver spoon in their mouth, they should pay the tax."

I would rather see an attitude of "holy crap, houses cost fuck loads. We need to find a way to redistribute the wealth, without punishing those who worked hard for 45 years, and whose kids need to earn over 100k a year to even get a starter home."

merry - no, you don't pay continued taxation on a car.

You pay for the car.

Then you pay taxation on petrol and for the use of the roads, via VED. It isn't a tax on the CAR. If you don't drive the car, or park it on a public road, then there is no need to pay VED.

It's like saying you pay for a cooker, and you also have to pay for the gas or electricity to use it.

How is society going to fall into ruin? People pay tax on everything, for their entire lives. Not having to pay tax on your estate doesn't mean you suddenly haven't been paying up to 50% tax on your earnings up until you die. It doesn't mean you haven't been paying tax on your savings in the bank (ISA's excluded).

A person's will should be a personal issue. Not an issue for the state.

If people insist that their adult children must live in 'the family home' along with their partners and children, why can't they take out a mortgage to cover any shortfall that might occur from inheriting a million pound house? Who are all these kidults who need a million pound homes but can't scrape together £140K despite probably inheriting cash and other assets and living rent and bill free their entire adult lives?

Just to add, I highly doubt I will be affected by any sort of inheritance tax. But I don't begrudge other people for wanting to pass on their wealth to their families, rather than the sodding government.

I agree.
I haven't inherited yet a penny from my parents who were brought up in council houses. I've worked damned hard to give myself and my kids a decent home and the very least I can do is hope they will have the proceeds when I am dead.

It's not megabucks.

And don't forget that a lot of people who have expensive houses bought them 40-50 years ago and have no income - just their home. It's their only asset, unlike some bankers who are getting a bonus of £1M+ every year.

I partly created a supply and demand yes, because I moved from a remote area where there was no employment when I graduated to the SE where there was.

It's called the north-south divide.

It's not me making basic errors, love. Believe me.

Although you are right that nursing home care (which I obliquely referred to in the early pages of this thread) is the elephant in the room. My kids would have had a decent inheritance from their grandmother if the value of her flat had not been completely eaten up (and more) by nursing home fees. And it doesn't feel entirely fair although I know with my brain that it's not unfair either, it's just...what it is. Although one can't help wondering what life could be like for the families of people with Alzheimers if the tax take was higher and/or more was diverted into care for sufferers...

Young people won't be able to have the same assets because a) they can't get mortgages in the SE due to the price of homes

This won't be helped by reducing iht. With no increase in supply prices will just increase accordingly. This has been the pattern for years.

b) they have to buy themselves pensions

True for everyone, even those lucky rich northerners.

and c) most of their inheritance (if it's not gone on nursing home care) will only be theirs when they are over 60 because my generation is living until their late 80s.

So basing their life plans on a future inheritance would be a bit daft.

I'm sure this has been asked before and I've missed the answer

But why can't inheritance be taxed once it's been split between beneficiaries as income

So lower rate tax payer would "lose" tax at their rate of usual taxation, HRT at their usual rate

It's probably too difficult and I'm sure the other way round makes more money...and I have the feeling I'm missing something really massive

Duh - it's just a vote winner for the South East, particularly for Londoners. Nice to get something out of it, even if I'll be dead.

As somebody up thread said, you could currently easily pay IHT on a London ex council house.

Ooh I like a PPs statement about benefits and state handouts also being 'unearned' money. The difference is with an inheritance - your relative worked hard and wants to gift you their assets but with benefits it's compulsory. Double standards with some of you ey.

Making sure people have enough money to not starve to death in a civilised society is not the same as making sure that people who get huge windfalls don't have to pay tax. Not sure why that needs to be pointed out.

If you don't drive the car, or park it on a public road, then there is no need to pay VED.

I stand corrected, I wasn't aware that so many people bought cars as garden ornaments.

The point is tax is not a moral judgement or a punishment. It often just is - either it works or doesn't. To be honest the biggest argument against iht is that it is too easy to avoid and is therefore inefficient.

However, successive governments have failed to abolish it so I would assume that doing so would leave a hole that would be difficult to fill.

BlackRider - I think some people like to think of themselves as 'the elect' - they deserve/earned all they have, everyone else has been lucky/is after handouts/some other mean spirited thing.

It does astonish me though that so many people with so little grasp of basic tax and economics are living in expensive houses in the SE (when we know from HMRC that not that many people in total live in such houses).