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.

If an inheritance is going to be split, won't the house need to be sold anyway?

The likely tax on a million pound house is £140k, leaving £860k.

There are situations where iht can cause homelessness, e.g. Where the threshold is £325 and there are still dependents - that is a situation where taxation would have unintended consequences and there is a strong argument for a change in legislation.

However are people honestly suggesting that in April 2015 we really need to address the plight of people who will inherit £860k rather than £1000k? Really?

Luck can only go so far in a debate about inheritance tax. I'm lucky that I have a mortgage free home in my 30's, I know that and I appreciate it. But I'm not lucky that I had to lose my parent at 14 years old. I'd call that pretty unlucky actually.

I realise that there will be plenty of people out there who also lost parents when they were young that didn't receive an inheritance, but that doesn't mean that my father shouldn't have been allowed to leave what he earned to his own child.

I think there is definitely an argument for taxing the beneficieriaries of the estate, according to their individual personal circumstances, rather than the estate itself: this point is often raised and may eventually come to pass.

I still believe in the principle of the tax though, which is that some of an individual's accumulated wealth should go into the common pot after he/she has died.

A friends parents died at 16. The house was rented, so he moved out on the day of his parents death, and was never able to return. Should the state have paid for the rent of the house for him as it was all he had left?

That's not comparable to the situation I talked about. Of course the state shouldn't pay the rent, but the men or difference there is that your friends parents didn't own their house. My friends parents did own their house, and because it was bought and paid for by them, they should be able to leave it to whoever they want.

Yes, my friend could have lived somewhere else, but I think saying that she could have done that 'easily' considering she had just lost both her parents is pretty harsh.

The so called bedroom tax is irrelevant, and a whole different thread.

Enough that they don't deserve to be completely ignored by their own government

But how many? And should we base all of our IT policy on outliers? Probably not.

I have sympathy with your friend, I really do. But the house would have to have been worth a lot to have a substantial bill on top of the tax free portion and ultimately she could have sold it and still been in a better position than the vast majority who had lost both parents.

Believe me I understand the wrench that would have been emotionally but she did have other options and sometimes life is hard. That said, I would support even greater time allowances/deferral for payment of the tax due if someone did still live in the home. But increasing the threshold is probably not the most sensible policy to address the issue you raise.

I can also see the virtue in taxing as the person receives rather than the whole estate, but suspect that would make fiddling it even more open season.

*beneficiaries even!

The bedroom tax and council houses are relevant. Either you are compassionate and make allowances in certain situations e.g. Bereavement or you don't.

If we are talking in terms of compassion, it would make more sense to maintain the £650k threshold available to married couples and use all this spare cash that suddenly appears to be floating around to ease the tax burden of people (e.g 16 year old child of single parent) who really might lose their 'family home' - not people who left their parent's house 20 years ago, have their own home and will inherit a tidy sum even after tax.

We can't base our tax policy on the few, unfortunate exceptions, though: these will arise under any system. We have to go by general principles of fairness when framing tax policy.

Ponio - it's you that has faulty understanding. Over £100K (AFTER pension contributions are taken into account) you lose £1 of personal allowance for every£2 you earn. You get to the 'no personal allowance' amount just north of £120k (after pension contributions are taken into account). It's certainly not peanuts and people in that band are paying a marginal rate of about 67% which is shit, I know - but if you are going to criticise the understanding of others perhaps best to get your facts right, hmm?

That remark was about Inheritance Tax, by the way - not the bedroom tax!

I would benefit from this but still think its wrong at this point in time. How are they proposing on making up the money?

Yes people have worked hard for their cash (or benefited from property market), yes its already been taxed, but the actual person that did all the working, paid the tax etc is dead so absolutely no-one is being taxed twice or having their hard earned money taken away.

There's plenty of people of my own generation (40s) quietly calculating future inheritances into their plans. Its another thing making the divides in the country harder and harder for people to bridge.

Given the dire state of some hospitals, education & basic social care in this country i think the government can ill afford to be giving extra allowances at this level.

merrymouse - My point is that those who do not inherit a house, already do not have compassion shown to them when bereaved and their family are renting. I have never seen anyone on MN protest that someone bereaved has to clear a parents council house within a week. A much more difficult situation emotionally and financially, than any talked about here.

I agree we shouldn't base policy on a few exceptions, but when we are talking about real people who are capable of real suffering, then I think we have to at least consider them. Especially when we are talking about the government taking away something that they rightfully own.

Council houses are irrelevant because they aren't owned by individuals who should have the right to do what they want with those own property.

There should be some compassion involved for people who lose their parents in a rented home, and there often is as some tenancies have been passed down. But compassion isn't really what this is all about.

It's the principle that the government takes everything you own when you die, and then just gives what's left to your family that I think is wrong.

It's because housing is short and financial security is so hard to achieve for young people that it is unfair that parents can't help their children and grandchildren without being taxed upon their death.

People in rented accommodation on here often complain about the lack of security and the high rents, and that's entirely justified. What I can see is the Tory government trying to make it easier for people to own their own homes and escape those problems, so surely that's got to be a good thing.

It seems that some people don't want anyone to have help from their parents if they didn't get it themselves, and that comes across as jealous and selfish to me.

I'm all for people paying tax when they can afford it, but not to the point where people who are living standard, unluxurious lives are paying more than what is fair.

I have never seen anyone on MN protest that someone bereaved has to clear a parents council house within a week.

Maybe that's because it doesn't happen that often. My grandparent died last year while living in a council property in an area of the country where the housing shortage is at it's very worst.

We were given a month rent free to clear the property, and had the option of paying the rent for a further two months if we wanted more time.

In terms of the rich paying tax it is possible to be rich and pay very little. This is because tax is based on income not wealth. So if you've got 5m in the bank but you don't actually work then you may not have an annual income of 100k+. Especially if the ftse goes down.

I'm not disagreeing with you mariamin.

I disagree with the policy and I disagree with DC's rhetoric about hard working people.
Some may well have worked hard (although not necessarily harder than those who don't earn 1 million+ houses) but most if not all have benefitted hugely from the rise in the property which is pure good luck.

It seems an ill advised but typical Tory policy (help the rich/ well off and shaft the poor and disabled).

But compassion isn't really what this is all about

But if you don't think that then your whole argument about your friend is a red herring. You just don't agree with IT. Fine, but that's different to the argument you've been making.

The fact is that legally she didn't rightfully own the whole thing, did she? You believe she should have but its not the same.

I still don't understand why you object to IT more than income tax. Could you try to explain that pls?

The old accusation of jealousy doesn't apply to me and at least one other poster here who disagree with this change.

And of course it's the people who actually DO work for what they have who will fund this. I don't mind paying more tax if it's going to go to help the needy. I will be voting to pay more tax. I bloody very much DO mind paying more tax to help beneficiaries of £1m estates. They can bog off as far as I'm concerned.

If you've got £5m in the bank, you are going to be given yourself an income high enough to have a nice lifestyle. And that income will be taxed the same as anyone else's.

And even if you don't, the government will still get it's hands on your wealth when you die, so it won't be losing out.

I imagine the poster doesn't mind income tax because she doesn't pay much of it.

the problem is that the rich have ways of avoiding this shit anyway, its only us 'normals' who have to pay, so raising is GOOD

I am not affected by this, as I won't inherit anything. If the economy was booming and cuts were not being made, I wouldn't have a problem with this.
But to give more tax relief to well off people, at a time when cuts are being made to the most vulnerable people, is just wrong. Money should be being spent on protecting services, not giving tax cuts to rich people.

It's because housing is short and financial security is so hard to achieve for young people that it is unfair that parents can't help their children and grandchildren without being taxed upon their death.

On the other hand you can downsize when your children leave home or you no longer need to commute to work, freeing up property for people who still have children at home and enabling you to give money to your children, potentially tax free.