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.

I see what you are saying. However, I would do all that I could to avoid my dc having to pay this tax. We will move away from Greater London eventually.

TBH I think it is immaterial as many homes will probably be sold for nursing care etc.

I think it is a good thing to raise the IT to 1 million

I support inheritance tax. My parents will pay a seven figure IT bill (hopefully not soon!) but their beneficiaries will still be left with a huge amount of unearned wealth afterwards. I'm happy to share, a tax on unearned money is fairer than income tax in my opinion. I don't get the family home argument, I moved out of my parents home almost 20 years ago, I have my own home now, as do most people who inherit.

I'm also happy to pay the IT on my own estate too, I'll be dead so why not spread the wealth a bit? I'm pregnant now so I do think about my future children, but he/she/they'll be left a substantial amount after tax. I'd be disappointed in them if they didn't want to share with others less fortunate and for the good of our society, to be honest.

I will have no regrets about this. We have never had much money and always struggled. When my dc were young we were only just over the benefit threshold.

Its real wealth if you do cash it in before you die and move away from London and the SE - but how many of us are able to move jobs and lives that easily? I am very relaxed about my estate paying a chunk of IHT should I die at a ripe old age, with kids established with careers and lives of their own. Of course any money they get at that point would be a bonus.

What freaked me out was discovering, on divorce a few years ago, that my teenage children would have to sell their home once the youngest reached 18 should I go under a bus. I think those of us in the SE who got the family home as our share of the marital pot suddenly feel vulnerable on behalf of our children. If I was still married then the IHT on the estate would be £650K not £325K, so even if we had both died the house would have been 'safe'. We had mirror wills just leaving everything to each other. This is a huge bonus of being married or in a civil partnership.

www.gov.uk/inheritance-tax/leaving-assets-spouse-civil-partner

"Transferring Inheritance Tax thresholds

If someone’s estate is less than the Inheritance Tax threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner’s estate when they die - even if they remarried.

This means the surviving partner’s estate can be worth up to £650,000 before any Inheritance Tax is due.

The transfer is made when the surviving husband, wife or civil partner dies and is done by the executor of their will or administrator of their estate when they work out how much it’s worth."

Handsoff - I think this is where the fact that it's a person's 'life savings' is relevant. You're not comparing like with like. There has been many a time in my life when the govt would have been welcome to swoop in and take 40% of my savings because it would have been 40% of nothing.

I'm not rich because I have x times as much as the average person in savings because average includes students and SAHM's and people who've just spent all their money on a deposit for a flat.

I'm lucky to have more money than pensioners with no savings, but they get substantial benefits in terms of paying for accommodation, living expenses and, above all, care.

When you're relying on a pension, you often need savings to subsidise living costs and big items like a new roof.

I regard IHT as a tax on me and my savings, and what I can hand on to my children. And while I'm still here, I can still vote. Fortunately, it's not just the tories who think rates should be adjusted. AGAIN - it was never intended to be applied to people in my income bracket. People will make different life choices if they think there is no point in saving for old age.

And I don't need lectures about social responsibility. I'd have a helluva lot more to leave if I'd chosen to use my degree in a more profitable arena than a lifetime teaching in a state school.

Woodhill since when is IHT clobbering those "in the middle"??? You have a funny idea of where the middle is. Just because you feel hard done by doesn't place you anywhere near the "middle" if you cross the existing IHT threshold.

Now if property prices were to collapse, back down to the level when the threshold was originally set then yes, I might agree with you.

Yes, it's great to have savings for your old age obviously. And while you're alive you will get to use them. When you die you don't need them, but the majority will still be passed down to your children if you don't spend them all.

I still don't think anyone has given an actual argument why IT is less fair than other taxes, beyond 'I don't want to pay it.'

I don't think the argument about who IT was originally meant to hit is relevant really. It's about making choices in the here and now.

Income tax was originally meant to be temporary (unless that's just a myth I've believed) - on the same logic, shall we stop it now?

In the SE where moderate houses are 500K.

And if it's only one person's estate, a house/flat worth more than £325K wipes out the pre-tax allowance.

Thymeout - you do realise that even under the current laws you can pass on hundreds of thousands of pounds worth of assets to your dc's free of tax?

What other measure than total net worth would make sense in defining rich when talking IHT?

Your income now is irrelevant.

If you're above the current joint threshold, you have an estate in the top 3% hence rich. I don't think giving your heirs an additional £140k of money that could be otherwised used by the government is a good use of limited government funds

Beloved - But I have to live for seven years after giving anything to my children or anyone else. You have to declare it at probate. And LA's get v sniffy if they think you've offloaded capital to get below the care threshold.

I've passed on as much as I think I can, but it's a fine balance. I don't want to end up financially dependent on my children. I've just paid £500 in the last year to the dentist. That didn't come out of income.

Bear in mind, we're not talking hundreds of thousands but money I might need to top up care or paint the house.

My house isn't worth anywhere near £500,000, and I'm not married or in a civil partnership so the threshold is £325K.

Are you misunderstanding the rules? You can pass in hundreds of thousands of pounds tax free, and then 60% above that.

You can try to avoid it by giving savings away but if that's what you do then really it's your too bad if you end up short. That's the risk you take really. Like I could try to avoid income tax (I don't), but if I got caught out then really the consequences would be mine to put up with.

Yes you will be able to pass on a £500k house (if you are not married like me and many other single parents on the thread) when you die without paying inheritance tax. You pay 40% on anything over that. So anyone with sense gives it away and lives 7 years and you pay nothing.

I am utterly consistent on tax - it is mostly all a bad thing and a big state is bad for people and the less fortunate and there is a moral obligation always within the law of course to pay as little tax as possible. That includes all taxes including relatively voluntary taxes like IHT. I don't pay into a pension which would mean I would be paying na awful lot less tax but I could - those kinds of things and IHT planning are all sensible things done by those who love their children and think big state is a moral wrong and are all lawful. tax evasion is total different, a criminal offence and you can end up in jail as that Nina Ricci fashion heiress has in Italy.

Who it was previously intended for is irrelevant. It's the here and now that matters.

I think there's some confusion between the rules now and what the Tories are saying they will do if they are re-elected.

The threshold NOW is £325k for a single person. As things stand NOW, the value of my house is over £325k and therefore all my, limited, savings are taxed at 40%. I know this because my single aunt's estate only sneaked in under the threshold because she'd left a percentage donation to charity. My mother's estate was OK because we were able to use my father's allowance, too, so the threshold was £650k. These were the regulations introduced by Gordon Brown's government after Osborne had made his £1 million pledge at Tory conference.

Lotus - 'anyone with any sense gives it away and lives 7 years and you pay nothing'. If you read my posts, you will see why I am reluctant to give my savings away at this point. Even if I did, the 'lives for 7 years' is still a bit of an issue. [sceptical]

You can't give your house to your children and still live in it unless you can pay the market rent, on which they will be taxed, out of income. My fil tried to be clever and gave half my mil's house to his dc and they all had to pay capital gains tax.

No. I think most people here understand the current threshold.

The rich don't pay IHT. They buy farmland (IHT free) and bugger up the market for real farmers!

Farmland only qualifies for APR if it is actually farmed.

And I don't need lectures about social responsibility. I'd have a helluva lot more to leave if I'd chosen to use my degree in a more profitable arena than a lifetime teaching in a state school.

"Because I'm worth it" eh Thymeout? I am guessing on this basis that a comparable state school teacher in London in private rental accommodation in today's market is not "worth it".

Classic cognitive dissonance. Why don't you just admit that you feel you ought to keep the money because you just happened to be lucky enough to get there first.

That's fine. Human nature allows us to rely on all sorts of different narratives to make ourselves feel better.

But the "I've put in lots already so don't tell me about social responsibility" argument is just silly.

In the SE where moderate houses are 500K.

Yes but the average person does not own a house in London . If you own your own home in London, you are already privileged.