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.

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.

She would have legally owned the whole thing if the government didn't take what people own as soon as they die. So yes, of course I believe she should have owned it.

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

I object to IHT because of the way it is administered. It is a death tax, not a tax on a capital gain. I wouldn't object to it if it were a tax on an unearned capital gain, where people were taxed on the inheritance they receive. But that's not what happens. I think it's wrong that the government gets to take what a person owns before their children do.

I'm not saying that people shouldn't pay tax when they inherit a lot of money. They should, but they should pay the tax after they have received their shared based on the capital gain they are benefitting from.

Exactly, dragon. that is EXACTKY the tories point! Family homes. The evil bastard filthy rich will still have to pay so you can all put your gnashers away .

Just to recap - IHT currently kicks in at £325,000. That is a flat in London. If you are single you don't get an allowance of £1million - it is £325,000.

Are the outraged posters planning to eave anything at all to their DCs? (Forget the value of the home for a moment). When you die have you arranged for everything to go to charity - the home, the cash, the car, the things... Is it principle or only a question of degree?

And if it really meant that it would go back in to libraries and the support services I wouldn't mind - but it won't.

Yes, you can downsize when your children leave home, but people shouldn't feel they have to do that to avoid paying tax when they die. Depending on the laws at the time, I will be using tax avoidance measures when I get older so that my children can keep what we own, but I wouldn't have to bother paying financial advisors to help me do that if inheritance tax was fairly administered, and the government would probably end up with more.

engeika - if you are single under the Tor proposals you will, in the future (if they get in. Pray God they don't) get £500k. That is > 2 flats in London, actually. It's > a house in many bits of London.

It's astounding how many people are spouting disinformation on this thread.

This thread is going to neatly divide itself into people who live in the SE/London, and those who don't, with the vast majority of the latter being completely unable to comprehend that having a house with equity makes you anything other that rich. Even if you only have a small salary.
I don't think the people selling this house have a particularly luxurious lifestyle, based on the pretty basic furnishings in their house, for example
www.rightmove.co.uk/property-for-sale/property-47247697.html

This proposal is an acknowledgement that house prices have skewed the value of estates
Someone with a massive house in the north and £200k in the bank will be a lot richer than someone with a house like that and no other assets, but one will be classed as rich and have a huge tax bill and the other won't. That isn't a fair or progressive tax.

sparechange - That is a 5 bedroom house, plus a study, plus 2 reception rooms and a conservatory. That is a very big house. I suspect it may have been rented out, hence the basic furnishings.

I don't think it's a good idea. Most people do not live in million pound houses. I think inheritance tax is one of the fairest taxes, and I say that as someone who will probably inherit in the future. The recipient of the inheritance has not had to work for that money. Taxes on income however, are a disincentive to work, particularly where you have high marginal tax rates. I'm not sure why the Conservatives have done this. I don't think it will be a hit with the majority of voters.

That the vast majority of people sorts out their finances so that no inheritance tax is paid, I think it's one of those things that people get outraged about until they are in the position of it affecting them - then it's different....

My MIL is staunchly labour, is constantly going on about 'the rich getting richer, and the poor getting poorer', Conservatives are evil etc. And yet this is the same woman who has very carefully put all her money in the correct place to ensure that on her death, no inheritance tax will be paid. And for that we are incredibly grateful as we have benefitted significantly from this!!! Most people appear to be the same, given that inheritance tax is very often avoided. My MIL doesn't see herself as one of 'the rich' in her 'rich keep getting richer' speeches, so it's apparently ok....

I do agree about the Conservatives rhetoric of 'no one should get something for nothing' only applying to a certain section of society. When DH and I received the 'gift' from MIL I said it was like we had won the lottery and DH rightly pointed out that in order to win the lottery you have to actually do something (ie. spend a pound and choose some numbers) whereas as we have done nothing for the money we received. Yes, we work hard and everything, but so do lots of people who don't get big gifts from their parents.

We don't need to be looking at homes worth over £1m, this proposal hasn't happened yet.

Look at properties like this tiny little studio flat that is currently going to be subject to IHT. It's a lovely flat, but it's still a flat, and anyone inheriting it that wants to stay living in that area is still going to have to pay stupid money to find somewhere else to live.

If they get in. Which they might not.

I know that it is not right for some people to have more and I hate myself for arguing for what seems like protecting a fortune for the few - but the reality is not really like that.

I used to be very pro high taxes and a generous welfare state - and to some extent I still am - but it isn't like that in practice.

The money just goes to a different set of fat cats - that's all. Social services bosses earning £100k a year, PFI companies "building" hospitals and schools at exorbitant interest rates, families who have never worked and never will living in much larger houses than I could ever afford, (or a nurse could, or a fireman could), Civil Servants and government staff getting £150k bonuses on top of their £250k salaries for hitting targets, favoured "suppliers" getting lucrative contracts, (Group 4??), millions wasted on IT projects that go nowhere - but which benefit a favoured few.

(And I have always voted Labour, volunteered for charities ,happily paid all my tax etc)

It won't mean better services or more disability benefit.

So allowing someone to pass and extra hundred thousand of the value of their home on to their kids when they die is really neither here nor there.

BTW - just to prove I am not lying - and this isn't even very nice

www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=OUTCODE^2501&minPrice=325000&minBedrooms=2&displayPropertyType=flats&oldDisplayPropertyType=flats&sortType=1&numberOfPropertiesPerPage=10

Aldi, you could still pay tax on your 'lottery win' so while you might not have done anything to earn it, the country could still benefit from it without your mil having to micro manage what she owns.

It's a tiny flat in Chelsea. Off the King's Road.

lucycant
It is a house that could have been bought for £200k in the 90s, and was probably bought before that.

If you spent £200k on a house then, you weren't a rich person who IHT was designed for. Just because a house value has gone up in that time doesn't mean the lifestyles of the people living in them have gone up with it.

I'm intensely relaxed about people not being able to afford to live in Chelsea if they have to pay IHT. That's not what I consider a Big Problem.

So what if it's in Chelsea?

People become attached to the areas they were brought up in whether they be in run down parts of the north east or in central London. They build lives, work, have family.

I don't see what the issue is with this policy tbh. I am serioulsy not rich but I live in the SE. I live in a very small 2 bedroom semi, no parking, downstairs bathroom and market value is 340k.

I hate inheritence tax, its a double tax. I have paid tax on my earnings, any savings (don't have any at the moment) so why should it be taxed again?

IHT is not a double tax. It's a tax on an unearned capital gain. The person who has died is not taxed, the estate is taxed. This is pretty basic stuff I am astounded that so many people know so little about tax.

Yes I know that Ptolomy - but it's not going to happen. We have used the money to buy a house in an idyllic area with a lovely school to give our kids the best life/childhood we possibly can. We will continue to contribute through all the other tax that we pay (DH as a higher rate tax payer), will continue to make donations to charity on a regular basis and continue to be incredibly grateful for the hand that we have been dealt thus far.

I know that will be incredibly unpopular on this particular thread, but outside of MN I don't think we are all that different to most other people in our position.

Being rich enough to pay IHT is nothing to do with lifestyle, it's about assets.

If you own a property outright that is worth a million pounds, you are bloody rich, end of, especially if it's in London and you paid peanuts for it in 1962 or whatever.

You can't argue that because your million pound property isn't very nice it doesn't make you rich. It's still an asset that you can sell - you could buy an equivalent house elsewhere in the country and use the rest for an income for life, something that someone who doesn't have that asset doesn't have the option of.

GentlyBenevolent the concept is still the same, the property/money in that estate has been taxed already.

Gently, of course the person who has died is taxed, the estate belongs to them!

If it were a tax on unearned capital gain, the the tax would be paid after the intended beneficiaries have received their inheritance, which would be entirely fair, but that's not what happens.

No disrespect OP, but I can't understand why this has shocked you.
The Tories are renowned for making the rich richer and the poor poorer.
It has always been the same and will never change, every time they are in govt this has happened and it's really the root of all their policies.
I don't agree with making the poor suffer, that's why I could never vote for them.

Flabby no, it isn't, and no, it hasn't (or, most of it hasn't).