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.

Figment My house probably 'earned' more than DH and I did last year, it's completely wrong, but what it means for my family is that my DC haven't got a hope of being able to afford to live where they grew up.

This is what £1m gets you near me it's not much is it?

My home will probably have to be sold to fund retirement and care costs, so I doubt my DC will get to inherit it.

I have never and will never vote Tory, I am far from rich but I do hope that the IHT limit is raised.

Of course they can reduce inheritance tax.

They just can't then argue that they are making 'austerity' cuts elsewhere.

Midnight - I mentioned that. On th first page of this thread!!!

Your house hasn't 'earned' anythung until you sell it.

For comparisons over time, here's a HMRC doc giving rates of death/estate/inheritance duties since 1914.

If you compare them to house prices, then the nil-rate allowance has been much higher in the past (and historically it's not just been the Tories who raise it to avoid more and more people having to pay this tax on property).

I don't think death should be a taxable event.

If you want to tax profits on sale of real estate, then it would yield much more revenue if CGT exemption were abolished.

I think that's a pretty terrible idea, but it fits the ideas of fairness expressed by many posters here.

Why do so many people object to paying IHT? It seems one of the fairer taxes to me. Say your parents bought a house for £30,000 in the South East 25 years ago and it's now worth £500,000. That's roughly the situation in the case of my parents' house. So you pay tax on your earnings and then pay your mortgage - just as people pay tax on their earnings and then pay their rent.

The £430,000 'profit' on your house is then unearned income surely? I just don't follow the 'taxed twice' argument.

I'd rather the IHT threshold stayed where it is, rather than see further austerity cuts, which hit the most disadvantaged. And yes, I am a homeowner (with mortgage).

This will benefit less than 25,000 families and is disproportionately focussed on benefitting extremely wealthy people (IFS). Looks like an attempt to shore up core vote. Which is more unfair - Inheritance Tax or Bedroom Tax? Inheritance Tax or being forced to sell your house to pay for your care home? They're the decisions your taking when you vote.

Mothership - that is a beautiful 4 bedroom house -over 3 floors - in a very posh bit of Ealing. You could get a 4 bed house in Greenford (which is definitely 'near' there) for under £400k. The very nicest houses in the very priciest areas are, of course, pricey themselves. But to claim that this means every property in London is worth over a million is ludicrous.

yanbu op

It is beyond my tiny brain why I am allowed to potentially inherit without paying tax, but a young family desperately trying to save for a house who have had less fortune than me have to pay income tax.

I honestly don't know if this change would affect me or not, but in general inheritance tax is one of the fairer ones.

In relation to the USA comparison maybe we should abolish the NHS then taxes would be lower for all. Dont see that being terribly popular

Just imagine if there was no inheritance at all and everyone started off on the same footing ...

I know, I know, the rich would find a way round it - I can still dream.

Think it's fantastic! As it stands my fathers estate is more then the threshold and we would be 'giving' the government a huge amount of money that they have already had the tax on. House wouldn't need selling initially but I don't see why any government feels they are entitled to a random 40% simply because someone died. It's a death tax on money that's already been taxed!

My mothers house which is all she has breaches the threshold. U.S. Children would face either having to sell it to cover the tax or raise funds ourselves to save the house.

Doesn't seem fair when my parents have worked for decades to provide for us and when they die we have to give it to the government.

Inheritance tax is outdated and this change will actually mean that the rich keep paying something the poor can't afford

Inheritance tax on houses strikes me as being extremely unfair. Fair enough, perhaps, to tax when the family sell the house (if they decide to do so) but to make people sell up their family home (yes, however big and grand - although many 1m houses in SE really aren't all that!) just so they are able to pay the tax - seems very wrong to me. And I say this as someone whose family houses are nowhere near the £1m mark

I suppose 'taxed twice' depends on whether you see something you've bought as yours.

It's a basic point about what ownership of property means, and what you can do with it without state interference.

CGT on profits of main home (currently exempt) might be fairer than low threshold IHT. And also would spread the tax yield across all points of the housing market.

My house probably 'earned' more than DH and I did last year, it's completely wrong, but what it means for my family is that my DC haven't got a hope of being able to afford to live where they grew up.

But by that logic, they wouldn't be able to live there anyway until you're dead. They could have a very long wait.

My parents bought a house in the south east for less than £30k. They sold it a few years ago for £500k. They also have a flat in London which they bought for £40k. God knows what it is worth now. They didn't earn the huge increase in value, and I didn't either. They were lucky, that's all.

People seem to want it both ways. On the one hand, these are the homes of ordinary, hardworking people on very modest salaries, which just happen to have appreciated in value exponentially. On the other hand, these people have earned every penny of the value of their through sheer hard graft, and they shouldn't be taxed on it again have they have paid tax on it all already.

Hi figment
In my own personal situation we earn more than what our house would earn (if we had one).
At the moment we have a flat which is making around 12k a year and desperately trying to find an affordable house to move in to.
Although pp are quite right saying that the average property price is around 516k, 1m is not such an outlandish price here.

DPs family members (all Londoners) all live in houses worth well over a million and heading straight to 2m. These houses were all bought several decades ago and have sky rocketed.

Although we are looking at properties well below a million I am looking to the future and hoping that in subsequent decades the inheritance tax will continue to be raised so Londoners who certainly aren't the elite or rich won't be caught simply because they managed to buy a house which happens to have snowballed in value.

All the people who are sobbing about having to sell the family home...are you all living with your parents at the moment?

I think perhaps inheritance tax should be different if the person inheriting is actually living in the home, and it is their only residence. People should not be forced to move out of their only home.

For everyone else, I don't see an issue.

Under the current rules it is possible for 3 children to inherit about £200k each of their parent's estate before paying any tax. Seems like a large amount of money to me.

On the other hand children are living in poverty because the government is short of cash and has had to make cut backs and the NHS is under threat and we all must tighten our belts.

Woohoo if austerity is over and there will be no more cuts, but I was under the impression that budget cuts were still 'necessary'.

Just doesn't seem to add up.

DPs family members (all Londoners) all live in houses worth well over a million and heading straight to 2m. These houses were all bought several decades ago and have sky rocketed.

So they never paid what the houses are now worth, and have never been taxed on the massive increase in value?

Woohoo if austerity is over and there will be no more cuts, but I was under the impression that budget cuts were still 'necessary'

Well, of course they're still necessary. How else are we going to pay for the rich to have caviar?

I would rather that they sorted out stamp duty - the most nonsensical tax ever (a tax on mobility IMO) and targeted corporations more. If they're such wealth creators then why has inequality increased so much after the last couple of decades?

Because they're creating wealth for themselves, iggly.

So much concern about being forced to sell the home of a dead parent, and yet so little concern about those who have been forced out of their homes by the bedroom tax while they're still alive! Double standards? You bet!!

Not at all. The home is bought and paid for by hard graft money already taxed at source.. The bedroom tax is a subsidy paid for by the tax payer.

If you really can't see the difference.....

So what have you done to "deserve" an inheritance, then, toby? Why do you think you're more deserving than the next person, whose parents aren't so wealthy?

Kampeki - what are you going to do with your inheritance?

Are you going to divvy it up amongst those who have none?

My first reaction was outrage, and when applied to those who bought London property decades ago, in a formerly run down area, it is an outrage.

However couples in their early thirties trying to upgrade to a two bedroom flat or a tiny house to have children are paying high multiples of salary and taking out mortgages that last until the new extended retirement dates. And paying all that out of taxed income on salaries which for most ordinary London folk are not inflated at anything like the house price hike.

At the bottom of this it is just trying to tinker around the real problem: the unaffordability of housing. That is what they should fix.