To think scrapping inheritance tax would not be popular with voters

[Lanadelday]

I'd say I can't believe the conservatives are considering it, but nothing surprises me any more that they do. But AIBU to think most people wouldn't back this anyway- I can't see it being a big vote winner and don't think they really get that voters are sick of all the inequality and so many people including kids and elderly, living in poverty, not wanting to make it worse.

People can inherit £325,000 without paying any inheritance tax. It only kicks in (as a percentage) about that. That's 325k of unearned wealth tax free anyway and the majority of the rest.

I agree!

There is a consistent pattern that if you ask people what income is needed to live comfortably then just about everyone (no matter their current income) gives an amount 30% higher than they get.

Equally no one wants to admit to being rich and privileged. Even the rich and privileged.

(Just as a reminder of the effective "threshold", a couple leaving their house to their kids need it to be worth over £1m before they pay IHT on it.)

All that will happen is people using equity release to get round it. Draw a steady stream of untraceable cash out and give it away.

The rules of IHT only really benefit those who had married parents with one family home, they can inherit £1 million, which down South probably wouldn’t go far.
Should large inherited pensions also be taxed to make things ‘fair’? As it stands you can inherit £1million of pension and pay zero tax on the income it if the benefactor dies before 75, after 75 and you pay 20%-40% depending on your tax rate.
I don’t believe anyone who says they want to lose a chunk of inheritance to tax.

@YouOKHun - thank you, I left thresholds out of the example just to keep it simple - the point being that you should be taxed on capital gain less what you paid for the property, not inheritance tax on the total property value when you die.

So, if you pay £316 000 over 20 years for a £200 000 home, which is worth £600 000 when you die - your capital gain of £400 000 should take into account your taxed income payments of £316 000, therefore the true gain is only £84 000 - which is what should be taxed.

Even people who aren’t currently subject to the inheritance tax dream of getting to that point. When people imagine themselves finally getting there, they don’t want to have to hand over their money, they want to keep living that dream.

people often vote not in their current best interest, but with their aspirations in mind.

@milkandbread I agree.
The super-rich sitting on piles of bullion handing off their lack of work to greedy relatives who havent worked a day in their lives are a minority.

The majority of those who are likely to be stung with inheritance tax are those who have worked, and earned, and saved, and invested wisely, and I do include those who have bought homes in that.

I am unaffected by the whataboutism. Whatabout kids living in poverty? Whatabout food bank use?
You think that is going to be solved by inheritance tax? Is it balls.

IHT used to be for the rich now it impacts ordinary people who just chose to save, rather than spend. Who are the mugs? The ones who were prudent and saved for old age, the the ones who spent it all as they went along don't suddenly have to pay tax on the money they squandered on fancy cars and flashy holidays do they. IHT is intrinsically unfair and a disincentive to save and be prudent.

It's not impacting ordinary people who save

It's impacting ordinary people who benefited from house price rises , and rich people who could save

I am a natural saver/ borderline tight and there is no way I can save enough to be hit by inheritance tax

Mother on the other hand got lucky when she bought her home

So although I may benefit from inheritance I don't think it's my right and I'd rather higher taxes there - better taxes when we are dead then when we are trying to live

@Lanadelday yes completely agree, includes everyone. Doesn't matter whether you're a home owner and your estate is mainly a property - or you're a renter and your estate is mainly savings. The money you leave behind is money that you have already paid tax on so in principal I don't think you should pay tax again other than genuine capital gain (property less what you paid in total / interest earned in savings and investments etc).

so your problem is that if you don't have something, others shouldn't have it either. Don't you think it's a bit childish?

How does that work if we want a more equal society? People who have free family childcare get taxed on that benefit, because it gives them an unfair advantage over the ones who have to pay?

Young people who got a scholarship for a prestigious school get taxed because it gives them an unfair advantage over the ones who didn't get one and can't afford the best school?

so your problem is that if you don't have something, others shouldn't have it either. Don't you think it's a bit childish?

It's not my problem at all and I'm lucky enough to own a place, but that doesn't make me have 'done the right thing' in fact there's a lot of luck involved, in particular the price of property at the time I first bought one. If I was able to pass on hundreds of thousands of pounds to my family I'd have no problem with that being subjected to inheritance tax.

We shouldn't be scrapping any taxes! Our education system, our adult social care system, social services, CAMHS etc are all absolutely cash-starved. We need to get away from this idea that paying taxes is somehow against our human rights. I would much rather pay higher tax and have the security that my son's school won't be sacking support staff for lack of funds....

I think this is a good idea.

Home owners are not claiming housing benefit during retirement.

Home owners fund care fees.

Not to mention that to buy in the first place they have paid big chunks of SDLT. Paid VAT on the fees for all services in buying and selling their property

Less than 4% of bequests will attract inheritance tax. More than 33% of people think that the bequests they are expecting to receive will attract inheritance tax.

@Greentree1 people unable to afford to buy a house are not spending all thier money on fast cars!

I think the IHT tax debate gets emotional as most ordinary people hold wealth in their primary residence.

As a thought experiment -there are four people who have £1 million

person 1 works hard and makes a lot of money for their organisations
and gets a work bonus of £1 million

person 2 sells a painting they found in their gran's loft for £1 million

person 3 inherits their parents' house which is worth £1 million

person 4 sells a business they built from scratch for £1 million

Who should pay tax on their £1 million and why?

bit different to scrap taxes, which no one is discussing, and having FAIR taxes. Which we have not.

Home owners have largely made an absolute fortune just through luck. If they need to use their wealth to pay for a care home then that seems reasonable rather than everybody else having to pay for it.

So you are punishing people who prioritise property, how is that fair on any level?

Income tax in principle is fair, shame the rates are unfair and discriminate some people, but at least no one is judging what you do with your money once you have it. You don't penalise people because they chose property over something else.

That's the thing. It's mostly driven by ignorance.

People pay it because they are too ignorant to avoid it. And they fear paying it because they are to ignorant to find out whether they will have to.

People who are against it also come up with some really stupid rationale. Like "no one should be taxed twice". Well you are taxed twice all the time. When you earn money you pay tax, and when you spend it on stuff that attracts VAT you pay tax there as well. Or when you spend it on fuel you pay fuel tax, or when you spend it on holidays you pay airline tax.

So the argument that it should be abandoned because it is "taxing money twice" is clearly nonsense.

I would be happy to see it scrapped. All through life we are taxed on everything we do, then we are taxed again at death, and I say this as someone whose family is unlikely to pay IHT.

and there sure is a lot of bitter people on here today with your posts about money being used to help people onto the housing market, don’t you think that for the great majority if the estate was large enough for IHT they would be doing all they can to gift it away so buying properties/assisting kids whilst they are alive?

So you are punishing people who prioritise property, how is that fair on any level?

Quite a bizarre thing to say. Who's being punished? tax isn't punishment anyway, it's for things everyone needs such as hospitals. And inheritance tax thresholds are already high. And people who bought property are luckier than renters really aren't they. Both sets of people most likely work hard.

we are taxed again at death
It's the beneficiaries who are taxed on wealth they didn't earn.

A lot of the housing market in expensive areas is fuelled by inheritance. It's just another prop really but I think it will be popular. I mean it's not a bad deal to get 1m tax free already.

LUCK?
How is saving for a deposit and paying fees, mortgage, maintenance is considered LUCK? How is delaying having a family lucky?

No one is complaining, but how ridiculous to penalise people who make other choices.

If you were looking at the wealth of the Royal Family, who is mixing private and public assets to make sure everything always benefit them, I understand.
But trying to go all communist on "home owners" is just wrong, and unfair.

It's family wealth and shouldn't be given away to those who haven't earned it either.