To think my children have no right to inherit £1m free of tax?

[Gasp0deTheW0nderD0g]

My husband and I had the good luck to get onto the property ladder in London in the 80s when people on ordinary incomes could quite easily buy a family home. By sheer chance our fairly ordinary family home is now worth an eye-watering amount of money. No way could we buy it ourselves now. Our children will definitely not be able to buy their own homes unless they get jobs on far, far above the average salary and/or we re-mortgage or act as guarantors.

The BBC says that George Osborne is about to announce that inheritance tax on family homes worth up to £1m is going to be abolished. Why? Well, obviously to win votes - but from a moral perspective, why should my children inherit £1m and pay no tax on it?

hit iht nil band

Totally agree that it is disgusting being forced to sell your home to pay for care. We pay tax in order to be looked after, you shouldn't punish those who have worked hard to get a house.

I do think young people these days waste all their money so they can't afford a home and don't put the hours in to work. I used to do three jobs at some times to afford a home. I never had any holidays abroad until I was 30, only now I'm retired do I go abroad regularly because I've earnt it.

No, it has not already been taxed. Or at least most of it hasn't. Let's say she bought the property for 300k. The children are inheriting an asset worth 1 mil, so who's paid tax on the 700k?

merry ouse the nil rate band doesn't currently only apply to houses, is this a new thing they're bringing in?

I think IHT is one of the few taxes that cause relatively little hardship. I think it's pretty shitty to be cutting IHT, which will affect only the fortunate who bought at the right time or the wealthy, whilst at the same time cutting tax credits.

My first house tripled in value, my 2nd has doubled. That's approximately half a million that I have not paid tax on.

What tax have we already paid on it? Most of its current value is inflation. If we sold it tomorrow we would get a huge tax-free gain after paying off what's left of the mortgage.

If we died next week and our children inherited it they would each get half of the market value. They would have done nothing to justify that either, except just being lucky (OK, losing your parents isn't lucky, but inheriting money is). Why shouldn't our estate be charged a portion of the house price? Our children would still do very well out of their inheritance.

That's what I have a problem with. People who are already lucky are getting more. People who aren't lucky (ill, disabled, no marketable skills through no fault of their own) are having money taken away from them.

Not fair, not equitable.

There are some very ignorant people on here.

The OP' s point is that she hasn't paid tax on the equity in her house. She's paid tax on the money she's used to pay her mortgage.

We all get taxed more than once on a lot of things we buy. I pay tax on my income. I then use my net (so already taxed) income to buy petrol (and pay tax), to buy my clothes (and pay tax), etc etc.

It's how the tax system works, and it's why we are able to have public services.

I agree with you OP.

The increased nil rate band only applies to the 'family home'.

You also only get the full million if your spouse died not having used any of their nil rate band.

If you are divorced/single/unmarried you can only use your own nil rate band - £350k or £500k for transfer of 'family home'.

I'm not sure how family home is defined.

And even worse, if they do treat the asset classes differently for iHT then, as someone pointed out upthread, people will stay in big houses they can't manage because if they sell them there will be more tax to pay on the cash. Stopping younger families from buying the bigger houses.

The idea that it's somehow unfair to pay tax on unearned income (such as price inflation or a large inheritance) is utterly bizarre and goes against the assumptions if progressive taxation and social equity.

I guess the rich flatter themselves that they've bought their way out if society for themselves and their kids, though.

So why not downsize when your children move out and help them put down a deposit for a house? Then they will pay stamp duty, so it will alleviate your guilt that the money is not taxed, plus it will stop you moaning that you've got so much money whilst your children can't afford to buy

£350k £325k

I agree with you OP.

Because you have already paid tax on that money .....???

That argument is so flawed for a number of reasons.

1. You've already paid tax on the money you with which you do lots of things that incur tax - but goods that have VAT, for example, or savings income over a certain amount, or investment income.

1. Most money that we receive has probably had tax taken out of it recently - an employer has paid tax on money used wages, a consumer has paid tax on the money that goes into a small business, that the small business then pays tax on. We're simply putting this in a different category because it's money passing to a relation rather than generating economic activity.

1. The OP has paid tax on the capital used to purchase the house, but she has not paid tax on the money it is now worth - the gain. That money has never been taxed, unlike the examples in point 2.

That said, OP, I'm on the fence on this, probably coloured by the fact I come from a country with no IHT. But I tend to agree that people with some form of privilege (and who have presumably already passed some of that privilege to their children) are likely to be those with high-value homes to pass to their children, further entrenching the gap between haves and have nots. So if there is going to be IHT, I don't think homes should be treated as 'special'.

Such changes also tax place in a wider context - such as the question of using £1 billion to benefit a relativy small number of what the IFS says are largely high-income people at a time when cuts are being made to support for those on very low incomes.

Yabu, not because you disagree with it. But because you can do something to prevent it. Sell up, by a smaller house and donate the rest to charity.

You don't have to agree with it OR go along with it. You can do something about it.

Or is this one of those threads, where the OP is actually talking about someone else's situations and the real home owners be leaving the property to their kids?

I just don't get why so annoyed about personal situation when they can change it

I will benefit from this in due course but I would SO much rather the money was put towards improving life for poorer and disabled people rather than middle class people like me who are doing fine already.

It's impossible to have a rational discussion on IHT. But if we just take this particular change - why only the 'family home'? Why not other forms of investment and capital? I know GO has identified how the loss of tax revenue is to be clawed back, but the real question is, couldnt the savings from tax on pension contributions go towards something that would benefit more needy people? And as said above, houses are incredibly undertaxed - not only is there no tax on increased value, there was MIRAS for years and tthe council tax paid on higher value homes is incredibly disproportionately low. There was a woman on a phone in last night sobbing because she was inheriting a £1.2 million house from her parents ( bought for £3.5k) and she would have to pay about £160k IHT. She, her husband and children had always lived with her parents - she'd never paid rent or had a mortgage ( she's now 50) and clearly they'd never thought to save up for this eventuality or take out insurance? WTF.

Presumably the private jet is taxed as part of the estate on death.

It appears from what the article that they are not going to increase the NRB but give you an additional allowance for homes worth up to a million, so it sounds as if it will work like agricultural property relief.

It really does benefit the lucky living in a property hot spot and penalise those who have worked, paid income tax on their earnings and saved it but the estates are valued the same.

Thanks, merry I see - wasn't sure if you meant currently or under the new rules.

I'd like to see IHT aligned with CGT, but without a PPR exemption. So IHT at a lower rate of 18% or 28% after an annual allowance of 11k. I'd also like to see prize money (lottery winnings, gambling winnings) over say 5k taxed.

Maybe the money raised would be able to fund better care provision for the elderly?

I think there is scope to raise taxes on 'windfall' amounts.

it is a bit odd that if you choose to spend your £1mn on a private jet 1 yr before you die that isn't taxed (except the vat, i suppose) but if you choose to give your £1mn away, dividing it between say 20 people, the amount over the 325 threshold is taxed at 40%. Why is a lifetime gift taxed, but a purchase not?

A purchase is generating economic activity, a lifetime gift isn't and is instead aimed at avoiding tax?

irene then when you benefit, use it to help those people.

No tax has been paid on most of it. With inflation and especially the printing of money real inflation has been at over 10% for years. For every three pounds earnt you have to pay one on tax, one on interest and one on the house. I doubt many peoples homes has gone up by over three times once you factor in inflation!

It's highly likely that we will downsize and help our children out in a few years. That's not my point, which is that our society is pretty messed up to have such a huge gap between rich and poor. The rich are not all rich because they've worked hard and had rare, valuable skills. Far from it.

You do realise you don't have to leave it to them? Make your will out to the dogs home and let the rest of us decide how to leave our own assets.