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.

Figmentofmyimagination I interpreted your post as saying that those who oppose IHT and higher taxes in general are less intelligent/ethical. Hence, "condemnation".

I do believe in the "social compact" and I am more than happy to pay reasonable taxes to help people who have met with hard times. I'm even happy for my taxes to redress the imbalance in society and I don't like the lack of social mobility in the UK. I see a lot of that in my neighborhood.

But what I've also learned in my neighborhood (which has led to me to move pretty far right - I used to be a Guardian person) is that the state can't fix a lot of the issues that they get involved in.

Binkybix As for the state having enough money - you're right, they're in debt. I could have better said, "the state has more than sufficient income".

Never in British history have those who earn more than most paid so much of the tax burden. There has been a massive change in tax burden from the better off from the less well off in the last 10 years.

Surely those who have the most should pay pay the most tax?

I am not über rich but to be honest I would not object to paying more tax as a family. If you make me pay more tax I may have to have to have fewer holidays or buy cheaper clothes. For other people paying more tax could mean not being able to put petrol in the car so they can get to work, skipping meals or fuel poverty.

If IHT is such a good tax, why not abolish the tax free threshold, and tax ALL estates @ 40%?

If there is to be a cut off point, then it needs to increase with inflation. The current threshold is "catching" more estates than originally intended

Indeed - you could say whatever you leave even £1k 40% goes back to the state. You could go further. You could tax all gifts ( we used to have capital transfer tax). You could also have an annual capital tax so 3everyone's savings (not just people with houses) would have to give say 5% of all their savings every year back to the state as in Cyprus. That would be a lot fairer than proposing just to tax some homes via in effect capital confiscation taxes as Labour plans.

Or you could just tax income at 99%! I don't really get the point that you're trying to make? From my point of view I'm arguing that IT is more progressive than most, given that we do need to collect some tax (obviously people have different ideas of how much tax take is needed).

I don't think I agree with mansion tax because of the liquidity question and because it's not the same as taxing someone who's dead.

And also because it is just one type of wealth.

I think some of you may change your tune when you're old enough to be the legator rather than the legatee.

The only consolation in dying is the thought that my children will be coming into some money. They all work in the public services and none of them is rolling in it.

Under the current limit, my house, 3 bed terrace in outer London suburb, will take up the entire allowance. So all my savings, which I've already paid income tax on to acquire, not to mention the tax on the interest they yield, miniscule tho' it is, will be taxed at 40%.

I've already passed some on through downsizing, but I haven't got a crystal ball and can't predict how much I'll need for care or house maintenance. My occupational pension just about covers my council tax.

I feel penalised for not having lived an extravagant lifestyle.

And this isn't just a Tory idea. Labour increased the threshold for couples after Osborne made his million pound threshold promise at the Tory conference which made Gordon Brown change his mind about holding a snap election.

Lotus your 5% wealth tax plan would allow us to eliminate income tax, national insurance, council tax, vat and the deficit.

Sounds brilliant for most of the country, sign me up.

exactly Thymeout

will they knock off the 1000s people have paid out in stamp duty to the treasury off the total value of the estate.

I think some of you may change your tune when you're old enough to be the legator rather than the legatee.

I think that's a bit patronising tbh. My mum is in her seventies and my dad is nearly 80, and they have an estate that will significantly exceed the current limits. They are thrilled that they'll be able to leave something behind for their children and their grandchildren, as their own parents died with barely a penny to their names.

Both of my parents have worked hard all their lives. They have always lived thriftily and invested wisely, and they are proud of the legacy that they'll leave behind, but they most definitely doesn't want the inheritance tax thresholds changed, because as well as loving their family, they believe in a wider society and they're happy to contribute to that. They also know that the current thresholds already allow for a significant amount of tax free inheritance, and that Dsis and I will be hugely grateful for whatever we get.

Thyme, did you pay £650k for the house?

If not, how much tax did you actually pay on the income purchasing your house. I only ask because an earlier post was bemoaning the "double" tax and had only actually paid £160k. Even assuming all of the income for that had been taxed at 40%, that's only an effective rate of 15% on a lump sum in excess of 30 years of median net earnings.

Maybe if we increased the IHT take, you children and other public sector workers could get the pay rises they deserve.

I really think we should be backing tax rises for the dead to enable tax cuts for the living not the other way around.

Handsoff - I'm no mathematician and have no idea how to answer your question.

I'm divorced, so my threshold is £325K. I've never earned enough to pay higher rate tax. All I know is it was always a struggle to pay the mortgage, especially when interest rates were hugely higher than they are today.

There are plenty of other ways to raise money to support public services - e.g. grow the economy so there are more jobs at higher wages, which in turn benefits the Exchequer through income from taxes at the current levels and cuts the outlay on benefits/tax credits.

I'm no economist, either, so could be wrong.

Sure - in theory you could remove the threshold and tax all estates of whatever value, subject to some sort of de minimus threshold so you don't end up spending more chasing after very small estates than you stand to recover.

You could also lengthen the pre-death transfer window and change the rules to be allowed to pierce trust arrangements.

Just because property values have inflated it doesn't follow that the bands have to change upwards. You could argue the opposite case just as well and say that the threshold should be lowered, to address the issue of windfall (sorry - hard earned) gains caused by property inflation, which has the added benefit of taking some of the air out of the property bubble.

In fact there are many historic bands that haven't been adjusted to take account of inflation - job seekers allowance, for example - still stuck at just £57 odd a week. What we decide to adjust for inflation is a social choice which is about values.

Should perhaps be different rates for different areas or maybe take into account the size of the house. As an earlier poster said - she can't quite believe it in Scotland where you may possibly get a small castle for your million whereas in London it could just be a modest 3 bedroomed semi.

So if you had different regional rates, what rate do you think should be applied to a London 3-bed semi that is inherited and then sold to buy a castle in Scotland?

JSA is £73 pw for over 25 year olds. And has increased with inflation, unlike my wages

when you pay a mortgage over 25 years' you obviously pay alot more than what you pay for the house, usually about 3 times.

inheritance tax was introduced for the rich and it shouldn't be clobbering those in the middle because of the successive governments policies over many years'.

IHT still only clobbers the rich.

The existing joint threshold is at five times average wealth. So if you have less than 5x the average. wealth no IHT is charged.

The proposed change would mean that almost an entire person's average wealth is lost to the treasury so that someone can receive £1m tax free.

If you have 5x the wealth of the average Briton, you are rich. It may all be tied up and inaccessible so you don't feel rich. Your heirs will though after they sell the tied up assets.

why not, shouldn't this be a factor plus stamp duty paid?. I think they should be offset.

Why?

Should I get everything VAT free because I pay income tax?