To think the Uk will move to an iheritocracy

[nappyvalley1992]

In the UK (especially the south east) PAYE earnings seem to increasingly play little part in overall wealth and what matters more of background/family wealth and increasingly the only path to a comfortable middle class life is via inheritance.

I am a late millennial of the south east whose parents own a very average home worth £1 million which under current rules I should inherit tax free. It's a similar story for almost all of my friends (amount almost equivalent of a lottery win). My parents were not even very middle class and had average jobs, they have just got lucky through house price inflation. Its not often spoken about, but I can foresee a wave of very wealthy millennials emerging in the next 15-20 years, and increasingly it wont really matter what someone earns in their day job, the biggest determinant of wealth will be those who are lucky enough to inherit.

Some millennials might even inherit large sums 2 or 3 times via grandparents, and inheriting from parents on both sides of the couple.

Will the government eventually start taxing inheritance more or what will the future look like in this area?

I agree OP.

Wages bear very little relation to the price of housing.

No one I know in London can afford anything like the houses they grew up in - but in time will inherit them. TBH even then with tax and between siblings, they’re unlikely to afford that same kind of housing.

I don’t think anyone feels they’re winning in this situation!

Thanks - I didn’t know that. Given that, what is the point of this thread other than to advertise to everyone that you live in a £500k house and are set to inherit a £1m house?

Most people do not go into care homes. A relatively miniscule proportion of the elderly actually do. They can have carers at home, if they need care. A care needs assessment will be done by the local authority, taking into account their income and capital assets, not including the value of their home, even if it's worth millions. Their house does not get sold / a charge put on it, unless they are not living in it.

Don’t worry OP, Labour will fix that for you in just over week.

Why would an anonymous person want to boast on a forum? I am not at all unusual and this is an interesting discussion point.

Yes, That is how i understand it.

I think inheritance tax will change. We have a situation where the countries wealth appears to be tied up in housing and we can't run public services from taxing workers.

It won't be popular. Right now only about 4-5% of estates pay this tax. It might make more sense to tax more but at a lower rate.

People will try avoid it, but if that's by spending money or helping out relatives it still gets money moving around.

As they should.

I'm in the same position as OP (obviously no one knows what the future is, but if my parents died tomorrow, there'd be a million pound house to inherit) and thinks it's absurd that people can get hundreds of thousands of pounds tax free, and then complain about the bit on top that they are taxed on.

IHT should be upped significantly. And loopholes that mean the very rich pay hardly anything should be closed as far as is possible.

I completely agree OP. It's unbelievably depressing.

As others have said it’s really unique how for the first time basically, the generational wealth we are referring to from house price increases will be lost in a generation or two through care home fees.

The granny harmer will be closing this off pretty sharpish...

It's not always residential care either.
Care in own home is expensive too, especially if it's 24/7.

I don't think wealth makes a huge difference except in that you can choose more expensive places.

Conditions that need full time carers, like Alzheimer's, don't have respect for wealth, you could also argue less wealthy people on average die sooner, so less likely to need residential care.

DF has dementia, is in a lovely care home. Physically fit, not likely to die anytime soon. It is costing c£120,000 per annum. This is in Scotland, not London. Many of my friends are in similar family situations. If it's not one parent, it's the other...

From what I see, the majority of 'inheritances' are going to be wiped out in care home fees. Not much left for the state, not much left for the family.

No. It's 1 million for a surviving spouse.

LOL at PAYE earnings

you should look at trusts first. Like, Duke of Grosvenor.

and - UK has ALWAYS been like this.

Only a few hundred thousand elderly reside in care homes, and the trend is decreasing, if you look into it.

Lots of Gen X have yet to inherit. A 55 year old today has a 75 year old mother on average. That 75 year old mother often has another 20 years of hopefully a healthy life. What could, and does happen, is that the Boomer parents are outliving their Gen X children. So the wealth goes direct to the children of the Gen Xers, who are Gen Z.

I think Gen Z will be wealthy too.

Maybe the Labour government could improve state social care for the elderly and then people might not be so grabby about not paying IHT.

Private care homes round here are 75k a year.

So why is everyone on the Inheritance Tax thread in Money Matters moaning about how unfair inheritance tax is? That's an enormous amount that the beneficiaries can receive before any IHT is due.

Inheritance tax is vastly misunderstood. Most people never pay it.

I mean, hasn't that really always been the case? There were a few generations of social mobility but the typical way of things was always that security was achieved through generational wealth?

Where you off too?

People whose parents have valuable assets (whether it's a house, land, money) have always had a leg-up in the world, haven't they? I don't think it's anything new. The difference is that houses in areas such as the SE are now far more valuable than they used to be so families in those areas who once didn't have much wealth to pass on, suddenly do.

If you're not comfortable with this, @nappyvalley1992, you can give away as much of your inherited wealth as you wish, the government and/or charities aren't going to turn down your money! That's what many wealthy people do.

Exactly. I'm more than happy to be so fortunate to be able to contribute to society via increased IHT and CGT when the time comes - the rates will hardly be crippling. Some people just hate Labour / are selfish.

@thepariscrimefiles I really don't know how anyone could inherit hundreds of thousands and complain about the tax on it.

Even if you have a parent who hasn't been married, and isn't passing down a house to their child, it's still £325k without any tax. Include their house and it's £500k.

If my parents died tomorrow, my two sisters and I would get £330k each, plus 60% of the rest. I don't think it's remotely unfair that part of that is taxed. More should be.

To be fair, I think people object on principle. Rather than because they think the numbers are small.