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.

yes, if only the people who had the most to leave were those who had worked the hardest. I would have far less to leave I suspect!

Im not in the richest 1% by any means but live in London where my bog standard 3 bed 1930s semi is has just been valued at £975,000.

In London, a house/flat is not a Ferrari, as pps have said, unless you sell it and move somewhere a lot cheaper.

Most London property-owners live Ford Focus lives in Ford Focus houses.

When they die, it's the bank of Dead Mum and Dad - or Granny - that enables their offspring to continue living an ordinary life in the capital or suburbs. Bear in mind, that the cost of living in London is higher than elsewhere - not just housing, everything from the commute to childcare to softplay, and the 'London allowance' doesn't go anywhere near making up the shortfall.

Ime, unlike the hypothesis in the Spectator article, inheritance is passed down the generations to get on the housing ladder, not to become buy to let landlords. But perhaps I move in less affluent circles. And the dcs/dgcs are often buying Ford Ka not Ford Focus properties with the proceeds.

When the current threshold means that the children of nurses and teachers, perhaps nurses and teachers themselves, are losing 40% of the surplus, then it's too low. London is increasingly becoming a capital of extremes. Those who would have had social housing in the past are being shipped to the midlands, and a creeping exodus of public service workers will not improve the social mix.

What did you pay for that semi niceandwarm?

yes, indeed. My daughter and her husband owe over £1m. My mortgage was £1.3m. Not all of us in London have had equity gains by any means. In a sense we should be taxing those out of London more than Londoners are taxed because out of London you are not paying as much for your properties nor for full time childcare so more likely to have spare cash to pay for benefits claimants and the old. The worst and most unfair asset to tax is people's homes whether in life or in death as it is the least liquid. i have no equity in my outer London house which I didn't gain out of earnings taxed at 40%+. Some OAPs of course will have made gains on their houses but also suffered the burdens - 1970s 60% inflation over 3 years when the value of your savings was halved etc etc.

if you earn enough to have mortgage that high you are hardly poor!

I have never said I was poor and I do not expect anyone ever to feel sorry for me because I'm happy, healthy, never ill and lovely children and strong enough to work for 30 years without a single break even for babies and happy to work 6 or 7 days a week for most weeks of the year. No one is going to shed tears for Londoners with £1m loans on tiny flats or anyone liable to pay inheritance tax.

I do not approve of the new changes anywya. First of all it is £500k for many of us not £1m because only those married get the £1m so lots of the headlines are utterly confusing. Secondly it makes tax very complex - have your money in the house and your £500k is IHT free. Have some instead in savings and the state takes 40%.

We need a much much much simpler tax system, much smaller state and fewer taxes altogether. Abolishing IHT and stamp duty would be a good start.

I have always been incredibly proud of the fact that due to the support of the state and a lot of luck I have been able to pay a fair amount back into the system so that others couod possible enjoy the kind of life that I have.

As I said earlier I may have to forgo the odd handbag or holiday but that is mere piffle compared to funding schools, hospitals etc.

Me, too. Philoslothy. Except my contribution to society has been hard work, slaving over the capital's teenagers, rather than hard cash, since I've never earned enough to pay the higher rate. No criticism implied. Good for you! I mean it.

I'd have earned more if I'd taught in the independent sector, because it wasn't till the Blair govt that state school teachers began to narrow the gap, but I chose not to. Or an entirely different career. No one ever went into teaching for the money if they were in a position to choose.

And I'm very grateful for the opportunity. My grandparents had to work much harder and my greatgrandparents lived in one room in Deptford with 3 children. (When they moved to 2 rooms in Lewisham, my 6 yr old grandmother was given the baby, put on a tram, and told to get off after 3 stops. Those were the days. I'd love to hear Mumsnet on that.)

Perhaps it hurts more if it's 40% of not a huge amount that you put away because you might NEED it for hard times, rather than the accumulation of wealth as such. At the current level, I lose 40% of all my savings. At 500K, I'd easily be below the threshold.

Thymoeout I left my high paying career to go into teaching.

No one goes round saying those who pay a lot of tax are great and do the right thing. People just want to kick us between the legs because they are jealous. Why can't we make heroes for the highest tax payers who choose not to move abroad and pay a lot of tax? Even a thank you email from HMRC would be nice and cost nothing, but instead Big State wastes money hand over fist and never in the history of this nation has the tax burden been so high on those who earn more than others. Big states are bad for people at all income levels.

• LotusLight Sun 19-Apr-15 15:15:06 No one goes round saying those who pay a lot of tax are great and do the right thing. People just want to kick us between the legs because they are jealous. Why can't we make heroes for the highest tax payers who choose not to move abroad and pay a lot of tax*

I don't think that anybody has ever criticised my family for being a high earning one, I thinks they could legitimately look at us and think you have been very lucky. You are a hero if you do somthing brave, I hardly think that choosing most high earning careers is a brave option. I chose clothes for other well paid women to wear and was paid handsomely for it, hardly brave!

I don't need thanking, I live a life free from money troubles, get to go to places I only ever dreamed of and have been lucky enough to have as many children as we wanted.

I think you are pulling our leg a little.

I certainly have never lived a life free from money troubles, but still might be subject to IHT if I am silly enough not to give away any assets 7 years before I die.

IHT thresholds have not gone up much and more and more middle earners are being caught by it which is you want a big state and lots of tax or you want no one to inherit anything other than genes, an education and good parental influence is a very good thing. If you think it's fine to pass money to children when you die when they tend to be about 60 years old or grandchildren then people tend not to think it's fine.

Anyway those who vote labour will be giving their savings away and houses year by year whether they can afford it or not as house (mansion) tax will start on properties worth £2m and come down to £500k just as ATED has for domestic property owners through companies under the Coaltion which started at £2m and soon comes down to any flat or house owned by a company worth £500k.

Psychology plays a big role. I can live with IHT because you can lawfully and laudably avoid it. Asset confiscation out of earned income is less fair so if mansion tax comes in and I have to pay it then I will lawfully ensure I pay the state about 3 times as much as the mansion tax lesws than the tax I currently pay because it will have got my back up and annoyed me and my buy in to the welfare state which was still there when I got child benefit and was not subject to mansion tax will be destroyed. I will do things like pay into pensions which I have not done and the state will be the loser.

I suspect that we will be "hit" by the mansion tax, the money is being directed at the NHS, I am quite content with that.

I think I am right in saying that it is charged against single properties rather than somebody's property portfolio which I think is wrong.

Indeed. I chose to house the 5 children when we divorced and their father chose to take the money virtually never see them and pay nothing (and he got 60%). he could buy lots of properties or a yacht or keep 5 women or whatever he might choose and I chose to keep the children in the same home with a very large mortgage and no savings. So I could have many fewer assets and none easily sellable and yet be the one paying the tax. No one will weep for anyone whose house is worth almost £2m even if their mortgage is over £1m but it would certainly have an unfair effect. It would catch local Indian families who buy one big house to house two brothers, their wives and children and the grandparents who because they love each other want to live together whereas if those 3 nuclear families bought 3 separate £1.5m houses they would not have to pay it.

However the mansion tax is very very popular by the way as people feel very sure it will never reduce to property levels at which their house is.

The money will never be directed at the NHS. Gordon Brown put up NI by 1% or 2% for high earners and said it would fund the NHS for a generation - it is always lies and instead big state pisses our money up the wall and gets bigger and bigger and worse and worse.

If multi-generational adult families living together have chosen to put ownership of that one big house in the name of one person or couple only, they have more problems than IHT.

On the other hand, if the other adults haven't contributed a penny to the house, they'll have decades of savings where other people have been shelling out hundreds of thousands.

Not an argument against IHT either way.

So my mil was stupid to get a very aggressive cancer and therefore be unable to avoid inheritance tax on her estate which includes bungalow in the south east which is above 325k.

How old is your poor mother in law?

(And my father died 3 years after my mother... although he had taken lawful steps to reduce some inheritance tax so I am not sure illness in older age is always something that has to scupper IHT planning. Mind you I may be the only person on the thread who has paid some IHT in the last few years and it is a very painful feeling indeed particularly when my father spent £130k a year on dementia care night and day at home and died 2 weeks after exhausting his savings. There was some equity in the house in the NE hence IHT.

They are interesting issues particularly as the law keeps changing.

Now what you leave in a pension if you have not drawn it can be in trust for children - no IHT. Life insurance can be in trust - no IHT. You can change a will on first death of parents to avoid IHT - Milliband did, my father did, Princess Diana's estate did. You can give money away before you are old . I am helping each of the 5 children with a relatively modest lump sum solely to buy first property. I am probably about 40 years away from death but who knows....

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Lotus - if you're talking about a deed of variation, you, as a beneficiary, can do it on any inheritance, or the executor can, with your consent. Money from my aunt went straight to my children. The press got all sanctimonious about Milliband and called it 'tax avoidance'.

But, as I keep on saying, the giving savings away at the right time gets tricky as you get older. Since I retired, among my contemporaries, we've had 2 heart attacks, 2 cancer diagnoses, and something nasty involving the carotid artery. All under 70. 'Ye know not the hour etc etc'.

Ok if you acquire money to give away when you're middle-aged. But I was only able to save when I'd paid off my mortgage.

Anything I pass on to my dcs will go into property, e.g. upsizing to somewhere with a much needed 3rd bedroom. I can't ask for it back when I need a new roof or the car packs up. And I'd like to have a few options if/when it comes to care.

Any suggestions for what I can do now?

Thyme, yes exactly that although Milliband is cross his mother saved the family the tax and wants to stop deeds of variation being allowed. tax avoidance has always been legal and is moral right. It is tax evasion which is a criminal offence and immoral. As the state spends money badly and Big State damages everyone not least the poor it behoves us all to pay as little tax as the law allows. Although anyone feeling they don't pay enough tax and would like to give money away by all means send it this way and I will ensure it is better spent that Governments spend it.

Yes, I know it's difficult I am giving each of the 5 children a fixed when they buy their first place and ensuring they graduate with no student loans.

I think it depends where you live, your class and how you eat and live and weight etc as to likely death and also the age of parents at death. In bit os Scotland life expectancy is a lot less than retired people in Kensington who run or work out every day and don't eat junk. I am expecting to live until about 90 so around 75 - a good few years to go I might start to give the children any money.

As for care etc as I paid for an expensive education for them, helped them buy property etc I would imagine (not least because they love me) they would pay for any care when the time comes or live with me and provide it. Like an impoverished farmer in an agricultural nation as I've so many children at least one is likely to be around to help in my old age even if one or two are busy or die early or whatever. We shall see. I am the ultimate optimist who expects to make more money between 50 and 60 than I've ever made in my life.