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.

It's none of your business ponio, but I will give a significant chunk to charity, if you're interested. And I'd be more than happy to pay tax at current rates.

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.

Absolutely.

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

^this!

The home is bought and paid for by hard graft money already taxed at source

Not by the person inheriting it though?

Plus my purchases are using income taxed at source yet I still pay VAT on some things. So that argument doesn't really work.

I hope they willingly pay inheritance tax which can help those who have not been as lucky.

Why not write your wills so that charities/HMRC get most of your money anyway rather than " hope" that they donate out of choice?

It's none of your business ponio,

Funny that. And yet you want to make inheritance everybody's business?

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

No, because it's not income. It's not anything until the house sold, at which point if it has become a beneficiaries second property, then it can be fairly hit with capital gains tax. But if the beneficiary is still living in the property, maybe because they have only just left further education and their parents have died or one of them lives elsewhere, it's just that persons home.

As it stands, that person who has just lost the parent they still live with will also lose their home to pay tax, which is incredibly unfair.

If this hypothetical family I'm talking about has actual wealth, as in investment properties or portfolios, or large savings accounts, then they will still be taxed upon death.

Funny that. And yet you want to make inheritance everybody's business?

No, not at all. I have no interest in what people do with their inheritance. I just want them to pay a decent rate of tax on large inheritances (including, potentially, my own) before they decide what to do with the rest.

As far as I know, as long as you do so more than 7 years before your death, you can avoid inheritance tax completely by downsizing and distributing the proceeds amongst your children.

I understand why people want to stay in their homes - space for grandchildren to visit, familiar surroundings, neighbours - basically the same reasons that people want to stay in the council house where they brought up their family.

However against the backdrop of a housing shortage (partly caused by an ageing population) and government cut backs, is enabling people to stay in a £1 million pound house without reducing their children's inheritance really a priority?

I don't know why some pp's feel that this threshold is too high and only benefitting the elite or well off.

Because it will affect 22000 estates out of 3 million over the next 5 years, which is 0.7%.

The average house price in London is not £1million, it's around half of that. Outside of London almost nobody has a house anywhere near that value. If you are fortunate enough to inherit £1million, then you are well off. You just are.

IHT is one of the most progressive taxes there is. Take from those who can afford it and redistribute it to those who can't.

So you pay 40% of everything over around £350K (not sure of exact figure). That's £350K tax-free and then 60% of everything else. I can live with that.

People always say that it's unfair because people have already paid tax on the money etc. Well that's the case for everything: pay income tax, pay again on fuel, council tax, VAT, etc. There are lots of taxes that come out of already taxed income.

Also, this will encourage yet more people to stay in an expensive family home on their own, rather than selling up and freeing up a bigger house for a family. Instead of building thousands of new homes, we should be looking at ways to renovate existing buildings, and encouraging single people who don't need a 5 bedroom house to move to a smaller one. If you can avoid IHT people won't move, but if you had a tax advantage by moving and giving the money away ahead of time people would be more likely to do it.

A fairer solution would have been to keep the existing limits but decrease the % you have to pay in tax.

An inheritance due to increasing house prices is fair game as far as I am concerned. I know that will annoy a lot of you. I'd rather see more efforts put into looking after the elderly, keeping libraries open and ensuring schools are fit for purpose.

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

Are you honestly suggesting that the poor pay IT now?

As they go I think it's one of the fairest taxes around, and I think this policy of taking money off of people who have earnt money to allow people to be given money that haven't earnt is outrageous.

If minors inherit there are allow to defer IT and I think (although am not sure) this is the case if you live in the house even if not a minor.

Grasping at straws

The minute they see a hint of Labour doing ok in the polls we get a train fare freeze announcement plus this inheritance tax announcement.

Didn't do much for me commuting for years they've been in power. Just feels hypocritical!

As far as I know, as long as you do so more than 7 years before your death, you can avoid inheritance tax completely by downsizing and distributing the proceeds amongst your children.

That's a pretty big 'if' though. Sadly a lot of people die younger than they would like to, so not only are they missing out on years of life that they could have had, their children are missing out on years with their parent/s and they could also lose their home.

Why is it that some people are so selfish that they want this family to lose their home as well as a loved family member? Don't they deserve some consideration from the government as well, or is the government only allowed to consider the needs of the poorest in some people's minds and everyone else can just suck it up?

So what if it only affects 22000 estates in the next parliament? Those 22000 families are still people.

The high interest and then the idea that we pay again through inheritance tax, is messed up. And anyone who thinks Labour will tax us all to fuck to fund shiny marvellous public services is deluded. That's not what they do. They tax us all to fuck and leave the public services screwed or throw money at random unnecessary shit like overpaid NHS managers.

When we were younger we saved and sacrificed like crazy to buy our first house in a rundown , rough area.

Over the last twenty five years we have continued to save, sacrifice and go without to buy our dream home.

Meanwhile, plenty of friends were in rentals, partying, buying flash cars, living the high life.

It is absolutely right and fair that our children will now be able to keep that which we worked so hard for rather than expect to hand 40% of it over to give to people who may have chosen to spend their money in other ways.

I always find the arguments that ensue when you mention inheritance quite funny. The outrage & frothing are a standard response.
London is only one part of the UK & many many properties in London are below £1m. The rest of the country yes the millions of us that don't live in the capital would like you to recognise that lots of us don't live in that weird property bubble.
The single mother in a flat argument - really!!!
Double taxation - nope, VAT is double taxation, stamp duty is double taxation (both paid for by my taxed income) IHT is different you didn't pay tax on it in the first place.
Nobody is owed or can expect inheritance and nobody should expect it - many many people will inherit nothing.
From a personal point of view I have no problem with IHT - before we had DS we were more cavalier with our finances, then we had DS and planned for what would happen if one or both of us died, how he would be looked after in the event he couldn't do so himself. When you have children you have a responsibility to look after them & that includes thinking about what happens if you die. If you fall into a bracket where IHT will effect your child's ability to live upon your death, then you can plan to mitigate the problem.
For balance - By the time we die our estate will probably attract IHT.
We often hear about poor people taking responsibility for their actions (child benefit, bedroom tax, dole) but the same should be said for everyone else.

My neighbour was undergoing pretty brutal treatment for cancer at a time her dh was still limited to what work he could do as he'd previosly broken his back. Then her father died. They were desperately struggling to keep their existing home and then were harassed into sorting out inheriting his estate just over the threshold.

The only people who benefited were the bank who offered them a extortinate bridging loan, which racked up enormously as the house was in no fit state to sell quickly to cover it and they couldn't afford to get it so. It was a horrendous time and very wounding at a time she should've been grieving.

So what if it only affects 22000 estates in the next parliament? Those 22000 families are still people.

Except in MN world if you aren't poor/single parent/carer/disabled you are automatically a greedy selfish git and you will be given zero consideration.

People seem to forget that the vast majority of people in life are neither rich nor poor , just doing our very best to get by.

People seem to forget that the vast majority of people in life are neither rich nor poor , just doing our very best to get by.

Very true, but this does not apply to those who stand to gain from this change to inheritance tax. We are talking about people who stand to inherit hundreds of thousands of pounds. If you don't think that this makes them incredibly privileged, then I would suggest that your perspective is very warped.

Honeydragon - Sounds a very hard time. Sadly though many people with chronic or terminal illnesses have to sell their house or get evicted, because they suddenly don't have enough money to keep paying the mortgage. Many of them would inherit nothing if their parents suddenly died.

Why is it that some people are so selfish that they want this family to lose their home as well as a loved family member

Why is it that some people are so selfish they will inherit hundreds of thousands of pounds tax free and still not want to pay any tax on the rest?

In an ideal world no one would need to pay tax but if we agree that it needs to come from somewhere, please explain to me why taxing what people have actually earnt (ie income tax) is fairer than taxing what someone is given and has not earned.

How old do you have to be before your parents' house stops being 'the family home'?

Ponio I completely agree!
Contrary to what some may believe, families with homes worth over 1m are not some bunch of good time Charlies!
They are people who have worked very hard and paid a lot of tax in to the system who's gains will be penalised extortionately.