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.

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

Yes the original home owner has, not the recipient of the inheritance. So unlike other capital gains, the risk is a generation removed. But even so the recipient still recieves a huge amount before tax kicks on and 60% of everything over that.

I still don't understand why other people think tax on money people have earnt is fairer than taxing money someone hasn't earnt. Can anyone explain their logic to me?

I mean people saying 'I want to pass all of my wealth on', don't you think that in an ideal world people would also like to keep all the money they earn?

kickassangel if the government took action that would lower house prices, the elderly couples in expensive houses would be the first to complain!

Agree with blackrider, this thread is a real eye-opener; I had no idea there were so many people who actually thought they'd earned the inflation of their house price.

11% of properties in London listed on rightmove in the last 14 days are over a £1million. It's a significant number, and there will be the properties who wouldn't be seen dead on right move on top of that, but it's not enough to convince this pie munching northerner that living in a million pound house is a devastating inevitability for every hardworking postman and builder inside the M25.

bereal you're talking gibberish. Most benefits are taxable.

yes yes . Some deserve free money and some don't. Those who worked hard (and got lucky too)should be ashamed for wanting to leave to their children.

I'm not against benefits im just saying people need to stop about unearned money because it goes both ways. Some people won't stop complaining until everyone is equal but not everyone is willing to work equally hard or take equal risks.
Oh well, let's see how far bitterness will get you.

theblackrider okay
Just adding my 2 cents

Gently

Oh you are mistaken.

Love.

Kickass

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."

In fact the two issues are directly linked and the answer is ....rent control!

Rent control would destroy the Buy to Let market, bringing down house prices - literally crashing down, more's the pity, whereas inheritance tax is a much more graduated tax.

With rent control, your children won't have to worry about not having a large cash sum, because property will be far cheaper.

The downside is that ever since the 1980s, the UK economy has become scarily dependant on consumer debt, fuelled by high house prices - like a giant house of cards, if you like. And the housing market could freeze up leaving many in negative equity etc etc etc.

But on the upside, if you take the bottom out of the private rental market, the price of property will fall and it could well produce a building boom. This was certainly the experience the last time fixed caps on maximum private rental were used, between the two first world wars. The UK has a long history of different types of rent controls across the 20thC. indeed as I have said elsewhere on this thread, rent control is the real story behind the biggest growth in the conservatives' beloved property owning democracy - and the reason why a lot of our parents and grandparents were able to get onto the ladder in the first place.

Lots of people on this thread wonder why there is no (or at least not such high) IHT in other parts of Europe. The answer - again - is rent control. The UK is unique in treating our houses as investment assets, rather than homes, and also at finding moral virtue in home owning as opposed to rental (although there is a certain amount of subconscious self-interest at play here, obviously!)

So there is a potential solution - although with 40% of our MPs across all parties now Buy to Let landlords, it will be a struggle to persuade anyone to grasp this particular nettle.

Apologies haven't read the full thread so do not know if anyone else has said this. I would benefit from this in respect to my parents house and my own house but I think it's wrong.

22,000 households will benefit from this change and considering they are always banging on about austerity it's a bloody cheek. All in this together my arse.

House prices need measures to bring them down so my children can afford to buy one day not have to wait till I pop my clogs then be able to buy.

Just a quick addendum - we are also unique here in the UK in thinking it is a good idea to make massive transfers of taxpayers' money to private landlords in the form of housing benefit to prop up the housing bubble.

And then, to add insult to injury, we castigate tenants for not being hard-working and thrifty enough. Nice.

Perhaps the clue is in the composition of our legislature.

So it turns out that the 30 hours free childcare will also be paid for by reducing tax relief on pension contributions for high earners. Can it be enough to fund both? Can anyone cleverer than me help work it out?

No, apparently HA tenants are now hard working and thrifty and that is why they have today been promised the right to buy!

It isn't yet clear whether private tenants are hard working or thrifty.

Those who worked hard (and got lucky too)should be ashamed for wanting to leave to their children

I don't think anyone has mentioned shame or said that people shouldn't be able to leave anything to their children. I have to say though, that if my children got in a self righteous strop about having to pay tax on a £1million windfall then I might feel ashamed, if I wasn't already dead.

No, apparently HA tenants are now hard working and thrifty and that is why they have today been promised the right to buy!

They were certainly thrifty and hardworking in the '70's given the number referenced on this thread who are now in line to leave estates worth over £1million

i know blackrider was right when she reminded us that you can't argue with stupid but, pink here you go:

^
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^

Plenty of young people in the SE can get mortgages. If however you are concerned about the property bubble in the SE the easiest way to address that would be 100% IHT with no nil band.

they have to buy themselves pensions

As does everyone else. You might just as well say they have to buy themselves toilet paper. This is an expense which is standard across the working population.

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.

If they were planning to use inheritance to buy a home that was a crap plan then wasn't it. Sounds like that was how you got on the housing ladder though (which explains a lot)

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.

I do not believe that you know most of the people living in social housing in your town.

But the main reason that young people of now MAY not be able to have the sort of asset levels built up by my generation is because of the pernicious effects of inheritances, which have helped to distort the property market not just in the SE but everywhere (all those people inheriting parts of the proceeds of a house in the SE and then buying property in e.g. the south west or as someone pointed out upthread, Norfolk, fuelling a bubble there). The thing you are complaining about - the difficulties that future generations may face - has been at least partly caused by the thing you are so desperate to not only protect but actually expand. So - a pretty basic error there.

what about all the council tennants who bought their homes at a discount and sold the home on, that was unearned wealth.

plus having a mortgage is a huge responsibility and interest rates go up and down.

I wish the government would stop overseas buyers. when my db lived in the Far East, he wasn't allowed to invesr in property as he was a foreign national

Rent controls would solve a lot of these problems

Woodhill - I agree that they are not great things either, but why do they mean that IT is unfair?

Also, on average the cost of paying rent is a greater % of income at al I become brackets I think. It's also a big responsibility paying your rent, which also goes up.

Csn those objecting honestly say that if you inherited eg 100k by doing sweet FA you would object to paying a % of it in tax in a country where people are using foodbanks and waiting 3 weeks for a GP appt and extracting their own teeth?