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'm not sure but the point I am making is that many dc may need a larger inheritance because they have the student debt and house prices are so high. I doubt they would fit the criteria for any social housing etc.

My generation could go for free with a grant.

Many DC may need a larger inheritance. Far fewer will actually get a larger inheritence. Why on earth do you think that your kids should get a larger inheritence than other kids who will also have university debt (of the same amount) and also not qualify for social housing?

So you want expensive new policies but also to reduce taxes for those who are already receiving a large, tax free windfall?

What about all those DC who come from nothing and end up earning a lot? You want to tax them more on their income so DC who have wealthy parents can recieve more unearnt money untaxed? So when do these people get the chance to accumulate anything and buy their house then, if they're working and paying to shore up your children's' inheritance? You've still not made any argument apart from 'I don't want to pay it.' At least Lotus is consistant and wants all taxes reduced along with drastic spending reductions!!

TBH I'm not that impressed by Labour's reduction in tuition fees - all of the savings will accrue to the graduates who earn the most, as they are the only ones paying it all off as it stands. So the policy takes money off high income people now to....save high income people money in about a decade's time!! Mildly redustributive at best I'd have thought.

Under £9k fees I think some arts degrees are fully covered but more expensive ones - sciences, medicine - would still be subsidised. But don't quote me on that!

No not necessarily. I just want the threshold of IT to be raised as it is too low in the SE and is hitting those who aren't particularly well off.

TBH as I've said earlier a lot of the houses are sold for care anyway but that is another debate.

and I don't think alot of people caught in the IT bracket are wealthy and have much disposable income. It is just the crazy inflated housing market.

I don't think high earning graduates should be taxed heavily either. The higher level tax payer earning threshold is too low as well.

I think most humanities degrees receive no central funding now.

As far as reducing the fees - personally it's not my favourite way to lessen the burden on either individual students or families. The burden on families (as opposed to individual students) would be lessened by increasing the minimum loan amount. The burden on individual students would possibly be more fairly reduced by cutting the interest rate and/or shortening the repayment term. But in terms of reducing the burden and reducing the bad debt, reducing fees is the best solution. The bad debt is a massive sucking back hole which is increasing in size (as black holes do) and while nothing like as bad as the pension black hole it could still end up seriously trashing national financial planning. Taking measures now to address this makes sense.

As far as who it helps - the students who earn the highest in the future may well not come from wealthy backgrounds. I didn't, nor did plenty like me. And the people who don't pay it back aren't losing, even if they aren't winning. And their future taxes, to the extent they pay taxes, won't be expended writing off the unpaid fees of others.

I'm one of the people whose estates would be >£0.5 m should they pop their clogs right now, and whose tax reliefs will be impacted by being taken away although I don't make massive pension contributions so my hit will be smaller than most, and my estate wouldn't be that much more than £0.5m so my benefit wouldn't be that much either - I haven't done the maths but it's possible it would just about even out under the Tory proposal. I much much prefer the scenario where my lost tax relief is used to help all students. That will tangibly help kids right now, including, but not limited to, my own. The possible benefit of my kids having lower IHT at some point in the future (which would depend on neither myself nor DH needing to fund care - since we have just emerged from a care funding nightmare with MIL that is quite close to the forefront of my mind) is not something I would prefer to have instead. In this case Jam today (even weak runny jam and not much of it) is better than possible weak runny jam in 20, 30 or 40 years time. Especially when today's jam is for everyone to share and future!jam will just be for my kids. Who don't even like or want jam and hopefully won't need it.

IHT is not hitting those who aren't particularly well off.

It appears to be hitting plenty of people who don't actually understand the concept of being well off though.

The higher level tax threshold is not too low.

I don't understand what you want then Woodhill - lower IT and lower income tax. Sounds like lower spending overall then? Fair enough, but you can't really bemoan things like tuition fees if you want very low tax and very low spend.

It also doesn't change all the arguments why IT is fairer than others (which seem to be countered only by 'I don't want to pay it) if you assume that some tax needs to be taken.

I live in London. I fully understand no disposable income and any money being tied up in houses. It actually sucks in a weird way.

I still understand that I'm wealthy as compared to the majority though. I don't understand how you can deny it really.

woodhill

I think I need a larger inheritance. Can you arrange it for me please?

And their future taxes, to the extent they pay taxes, won't be expended writing off the unpaid fees of others.

This doesn't worh though, surely, because the cost of the degree comes from somewhere (unless universities just receive less money). Therefore general tax covers either the loans that aren't repaid or the money that goes to universities in the first place to replace the amount they lose through lower fees. Or have I missed something obvious?!

I don't feel strongly either way on the tuition fee policy - just think it's not as great as it sounds as a headline because of who benefits and because it's neutral for those who won't be high earners. If they take that money through reduced pension relief I think they could probably use it more effectively to help the people the headline actually suggests it does.

I was drawing a distinction between government spending qua spending - a budgeted choice which will cost what it costs at the time it is paid - and government writing off of bad debts, which is uncertain and subject to external influences not limited to interest rate fluctuations, and which, in the way of all things, is likely to be required at the worst possible moment. The first option involves making a conscious decision that something is worth spending money on, deciding how much money to spend on it and then doing that. The second option involves a degree of living on the never never and an increased level of risk. I'm not a fan of risk. And I also thinkk that government subsidy of education, so far as it happens, should be applied to all not just a few.

I do actually strongly believe that the introduction of fees was a huge mistake. When Tony Blair committed to accepting the results of the Dearing review, before the 1997 election, nobody in acdemia thought that the review would actually recommend the intriduction of fees. Blair made a huge mistake - obviously the Tories and Liberals compounded that mistake BIG time. The posts upthread demonstrate where this commodification of education can end up. It's not good for the students, it's not good for their parents and it's not good for the country. The only people it has turned out to be good for are the VCs who now earn sums between £200k and £0.5m - and for what?? For this our kids have to steep themselves in debt? I think it's one of the worst moves we have ever made in educaiton policy in this country and I wish Labour were bold enough to reverse it. Sadly, they aren't.

If a child picks a degree which will never make them any money as they want to contemplate their navel for life whilst meditating then they get their university education free. If they work hard and become tax payers for 40 years their university education costs them a fortune! only in topsy turvy UK would that be so.
Best be putting a stop to all those teachers getting degrees then.

there is no particular connection between working hard, and earning lots of money

I totally agree piglet, my husband and I both have earned high wages in our time. Neither of us work particularly hard.

I have relatives on the minimum wage who work far harder than I ever will do and friends wh with high incomes who also work harder.

there is no particular connection between working hard, and earning lots of money

Well said! And I say that as a relatively high earner.

I really hope it is raised!

Lots of people taking out loans will never have to repay them adn those who do repay the loans because they earn over £20k or whatever the limit is pay off their own loans and through their taxes the loans others will never pay.

Teachers are not those who will never repay their loans. They are relatively higher earners who earn enough to repay the loans. Careers where there is no repayment would be something like writing - average pay £6k a year, acting (most of those end up on minimum wage in cafes) etc.

You are talking Lotus about picking a degree, many teachers pick a degree before choosing to go on and do a pgce. Not all choose the B.ed. route.

Yes, I know. I just meant teachers are in the category of people who will be paying student loans back whereas those who will always only earn £13k or work in the family business and never earn over £15k in effect get a totally free university education which is not very fair.

They are pretty few and far between Lotus.

IHT is a horrible tax and should be scrapped altogether.

It never stings the 'rich' as a good team of accountants can get you out of it fairly easily so long as you plan ahead. The people who is does sting are the hard working middle classes who have worked hard and saved hard all their lives only to see their estates creep up in value as they reap the rewards of their being financially responsible during their lives. It is more prevalent in the south east where property prices are higher, but a great many people who do not regard themselves as 'rich' are unfortunately being stung by surprise tax bills once their parents pass away and everything is valued!

A step in the right direction by the Tories, but they should go further and scrap it!

I agree with main.
(Dawn we may be at cross purposes. People who never pay student loans back are not few and far between. Isn't it going to be something like 50% of those loaned to! First of all the graduate women who go part time after 5 years of work and for the rest of their lives, then all those who despite a degree never earn more than £20k, then those who picked careers which won't earn more than minimum wage and then the many who move abroad as student loans co is not good at suing you in Papua New Guinea etc if you've moved there. It's a massive ticking time bomb for tax payers although they may be able to sell off the loan book as they did for the first loans recently but then there was a huge write off).

Man appears to have the idea that "hard working familes" are the ones who have the money and pay the tax.

This is a verbal trick.

Families struggling to survive on minimum wage or zero hours contracts may be working very much harder in worse conditions and have less to show for it.