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?

No philoslothy, it isn't ridiculous, it's the market. London is now an asset class for global wealth and my tiny flat is supposedly worth £400k so Would be liable for tax on £75k for a property that non-Londoners, and people with the privileges you have said YOU have, would turn their noses up at.

I am a working class Londoner who had no birth advantages or inheritance so I don't feel compelled to give this money away, thanks very much

I am in danger of sounding like a Monty Python sketch but I can't even claim the glory of being working class, I come from the pure underclass so have not benefited from inherited wealth or passed down privilege. My children have, partly from the money we made from selling our own London bedsit and gradually upgrading. I am not the sort to turn my nose up at things.

the message that it sends to society about who we care about?

Doesn't much of it come down to the fact that those with wealth power and influence are (by virtue of those things) in a position to ensure that government policy protects their interests.
The wealthy live off of the rest of us, just because they can ?

Op you're within your rights to leave as much of your estate to the government as you like! Then the government can spend it on things like wars, immigrants in Calais and possibly schools or the nhs may get a fraction.

I'd rather my children had the money or were able to live on in the family home.

The fact is, nobody pays IHT on their own home or wealth. They pay it when they receive a chunk of unearned money. It is paid by your estates beneficiaries, not by you.

No they don't. If they did, I wouldn't be on this thread complaining, because that would be fair.

Many of the arguments around this seem to assume that if someone is going to inherit, then they must automatically be significantly advantaged compared to everyone else, bit that just isn't true from what I see around me.

The IFS did a paper on this before the election, where they found that those inheritors who would benefit from the change are disproportionately at the top of the income distribution.

Last year, the estates of 35,000 were subject to inheritance tax; around 5% of the total. In the years ahead, 90% of estates will still pay no inheritance tax.

The IFS was negative about the proposal, saying it had the potential to distort savings behaviour and work incentives in an undesirable way.

They also quoted leaked Treasury analysis that advised: “there are not strong economic arguments for introducing an inheritance tax exemption specifically related to main residences”. The document lists a number of problems with the policy for example the fact that it would encourage investment in owner-occupied housing rather than other more productive investments and discourage downsizing late in life when that might otherwise be appropriate.

(Last bit lifted directly from the IFS paper).

Honestly, if people are in the position to be inheriting from one of the tiny percentage of estates that are subject to inheritance tax, they are privileged.

Can you please stop changing your name

Who is changing their name?

It's simple then rather than moaning about it change your will.
Problem solved.

Yanbu. Who cares if tax has been paid? It's still free money to your children, why shouldnt they pay tax on it?

BabyFeets, I would like my children, and grandchildren if I have any, to live in a society where there is government-funded spending on education, health, welfare, policing and all the other attributes of a civilised society. That means paying tax to fund it.

BabyFeets seems to think that because Philoslothy and I agree we must be the same person. We're not. Advanced search would show you that.

Exactly Jassy, the whole system is bollocks because of the way estates are subject to inheritance tax instead of tax being payable on a capital gain that has come through inheritance.

If they stopped taxing estates and started taxing beneficiaries, we could fairly increase the revenue that the treasury gets from people's deaths because more people would be paying the tax, just on smaller amounts.

It's simple then rather than moaning about it change your will.
Problem solved
Are you daft or disingenuous?
That doesn't solve the problem at all?

I think if all was well with the uk and tax credits and benefits weren't being cut it would be great. But as it stands the government on the one hand are saying we need to save all this money by cutting benefits and on the other saying, actually we don't need that extra tax, you keep it. It's all done to benefit the wealthier amongst us. Why not leave the threshold as it is and get a bit of tax from the bit over £625000 or whatever it is for married couples.
Haven't rtft so obviously this has been mentioned already. This government just loves to keep house prices high too. It all makes me sick.

Why on earth would you want your own children to be peanalised and have to pay tax on your family home.....? you're strange you are!

It's simple then rather than moaning about it change your will.

I will when I'm old enough for it to be a reasonable consideration, until then I'll just have to hope I don't die young.

That's a big part of the problem. People should be paying inheritance tax, and more people would pay it if they didn't have so much incentive to avoid it because of it's unfairness.

Oh so sorry GaspOde for not wanting to donate all that to the Marxist dream. I never thought back on my council estate that getting a degree and working in a profession for 35 years paying top rate tax would mean that I would end up being guilted for my very modest wealth by considerably more privileged people on an Internet forum.

Maybe I should have copied those of my peers who got pregnant, got a free flat and lived happily ever after, voting Labour and being a smug taker.

FFS.

Add message | Report | Message poster LauraW83 Sat 04-Jul-15 10:54:23
Why on earth would you want your own children to be peanalised and have to pay tax on your family home.....? you're strange you are!

Perhaps in an ideal world we would just pass on whatever we were lucky enough to acquire in our lifetimes and those of us who did not want to do so would leave the money to the state or charities. But we are not living in an ideal society we are living in times when the most vulnerable are having vital money and services taken away.

There's always the option to leave part of your estate to charity if your conscience isn't clear. From what I read £1m isn't much in London anyway. But I think they should have just raised the level to £1m regardless of what the family home is worth.

The 'tax has already been paid' argument makes me despair.

Look at it this way: X earns a salary of £10k. She pays income Tax and National Insurance on it. Her employer, Y, pays employer's National Insurance on X's salary. Y has also already paid corporation tax and business rates on the income with which he pays X's salary. X buys a chocolate bar costing 40p and a pint of beer costing £3 pounds. She pays VAT on that chocolate bar. She pays alcohol duty on the beer. The pub where she spends that money uses it to pay salaries, paying employer's national insurance. Meanwhile, the council and the gov't are spending that money on emptying the pub's bins and paying for the police and the school that X's kids go to.

TL/DR Tax isn't something that happens once and then that's it. Money is constantly taxed and then spent (by central and local gov't) on stuff that keeps society going and allows for people to make money, which is then taxed, and spent, and taxed, and spent...

TL/DR part 2: You know the story about London water having been through six people? It's like that.

What an awful problem to have!

It's just another chapter in the Book called "Life ain't fair".

I have equity in my home but I have no hesitation about my family benefiting from it. I don't feel bad about it either. Sorry if that doesn't sound worthy enough, it's the honest truth!

It you feel strongly about it, then sell your asset and donate some of the money to one of the many good causes that will benefit people with less good fortune that you and your DC.

But if you want to not destroy trust with them, then make sure you get them fully on board with whatever ethical choice you make, so they don't get a nasty shock.

I am a bit strange, Laura, but not in this respect, I think! What's wrong with paying tax at a reasonable rate?

I can't pay for my own private police force and army. I pay a share of the costs along with everyone else and then I get the benefit.

And so on and so forth. We all pay a bit in and we take out what we need.

No need to worry, Daisy, our children have seen our wills and we have talked through with them what we've done. They get most of it and good causes get a bit too. No trust issues at all because fortunately my children are not greedy and are not (I hope) counting on inheriting a lot from us in (again, I hope) a few decades' time.

What does your will have to do with it?

Or philsopoy is answering like I was talking to her is why I think it was you