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 think 60-70k is cheap!!! My grandma spent double that. Over a few years though.

Funny how people get up in arms about the rise in property values being money that people have accrued for no reason and say they haven't worked for it. But the government taking 40% of someone's property without doing anything to deserve it is fine

Unless I die earlier than I expect then my millennial children will be in their 60s when they inherit from me, assuming i dont need to sell up to fund care or supplenent my (meagre) pension; so while it will improve their retirement, its not going to make a difference during the bulk of their earning years. They will have bought their homes and raised their children from their own earnings by then. I expect the real benefits to be felt by my gen alpha DGC. (And I'm not a boomer I'm gen X.)

As much as parents and grandparents may have what we millennials consider as a significant wealth, we also have to consider possible care costs which I think can hugely deplete large sums quite quickly. So I don't think the emergence of wealthy millenials will be as obvious because a large amount will have parents and grandparents who hopefully live to an old age but with that comes potential residencies in care homes, nurses, carers, assisted living. And I think they'll then be left with far more modest incomes. Although I'm not sure what happens with property if they end up in care homes, do they have to sell and use profits?

My understanding of the “family house” is exempt from IHT.

Yes, that is how tax works.

@Bignanna Ah, I was confused when @Blanketyre said, "Should be able to gift 10k per annum." Not sure where that number came from.

I think they should keep the 7 year gift bracket and raise the amount to 10k.

The OP is clearly a Labour SPAD trying to drum up support for increases in inheritance tax or a journalist who needs a good culture war story. It doesn’t signal authentic at all.

I’m becoming increasingly pissed off with MN being used to influence opinion. The moderators need better detection tools.

OP: ‘Me and all my friends in the South East aka London are about to become millionaire's, don’t you just hate that for us?’ Sure Jan.

@nappyvalley1992

If a house is passed down to children or grandchildren, there is an extra allowance of 175k, making it 500k per person, 1 million per couple, so the Op. is spot on with her 1 million allowance per couple.

This maybe correct but it may not be because
-The Labour party are about to change the law on inheritance tax in the budget and will probably keep going year on year.

Even as it stands it may not mean @nappyvalley1992 is in line to get a £1m house tax free because

-The spouse only gets the benefit of the dead spouses £325,000 basic inheritance tax allowance and the £175,000 to the extent that the dead spouse hasnt used it. We don't know what the will provision is of the First of @nappyvalley1992 s parents to die at the point they die. They maybe using part of their allowance themselves if they are leaving assets to people so the remaining transferred allowance may be less than £500k

-The £1m house maybe worth more at the point of death and be over the nil rates.

-this applies to the whole estate so will include any other assets. most people in the £1m house bracket will have money in the bank and investments.

-things change - care costs are astronomic, people downsize as they are widowed and take up a luxury cruising habit.

Fascinating perspective. Not really thought that this could be the thing that turns some of the younger generations fortunes around.
It'll be very South East focused and will create a lot more inequality though.

However you should not draw attention to it 😉 as the Government will tax it and absolutely NOT give anything to those whose parents houses didn't increase in value.

The government isn't a person who needs to 'deserve' the money it collects in taxes, is it? It's an official body raising money on behalf of the country and the more it raises the more there is to benefit its citizens (whether you agree with how various administrations go about this is neither here nor there) it's money into the public purse, so obviously people aren't going to object in the same way as they would to an individual becoming wealthy through unearned income.

Why not just raise income tax then?

Absolutely! I call boll**cks on these posts! So strange that Labour is about to massively increase inheritance tax ( if rumours are true) and suddenly all these people on Mumsnet are saying that wouldn't it be marvellous if the government increases inheritance tax as noone needs/wants/ deserves to inherit anything? Also it's really strange that Labour has abandoned the cap on care fees and suddenly all these people on Mumsnet are saying that old people rarely need care anyway and if they do it's dead cheap. What utter tosh. Lots of old people need care, it's extremely expensive and not something the government can afford. Aren't we told that councils are spending too much on social care? Families need to hold onto their wealth so they can use it to support themselves and their loved ones because the government can't and wont. I don't believe all these posters who say they will gladly give up their inheritance are genuine!

Totally agree.

I've never seen attitudes like this on mumsnet before and I've been here a while.

It smacks of - noone needs or deserves their own money. The State must take it. The State will provide.

@nappyvalley1992 we do - but both have hefty life insurance re inheritance.

Is it just me that has never priced up my parents worth and worked put how much I stand to get?!

I think it's a fascinating debate and IHT raises a lot of passion.

I think fundamentally we have to ask the question do we have the right to pass money to our offspring as our property without the state taking any of it? There are schools of political thought that say we have a fundamental right to property and we can determine when and who it is given without the government laying claim to it.

I think a good question is to what extent inheritance fuel inter regional and inter class divides in this country? I genuinely don't know there answer but I think the OP has a point that the super heated SE housing market does leave many able to significantly support their offspring in a way many would be envious of.

To some extent maybe gifting is worse than inheritance as you gift at points of your child's life when the money will have a tangible effect on future prospects e.g. paying a housing deposit, paying university fees, subsiding children doing low paid work in an intensely desirable job sector to get a foot in the door etc. The problem is you can't feasibly tax such gifts.

"Apologies if this sounds ignorant, but I don't know any millennials whose (usually) boomer parents are renting."

@nappyvalley1992 bless you, fellow millenial here and know plenty with skint parents renting lol maybe you just live in a privileged circle?

No need to be sneery. Rentals weren't so much of a thing 50 years ago. There were council houses, but thatcher sold off most of those.

I have friends in SE not wealthy. Both parents and in-laws have just gone into care homes. £21k a month is being charged. It won’t take long for their £450k homes to be taken. Not all of us in the SE live in £m homes.

what about those who bought their council homes through RTB? They must be laughing now. But no one I’ve mentions them.

both of my parents have died. Owned their own house in SE. I inherited nil.

It does sound as if inheriting a family property is currently a way of avoiding IHT Whereas if elderly parents downsize and move into a retirement flat or home, and still have significant money left over from the house sale when they die, that cash would definitely be subject to IHT.

Some elderly people do need to move if they can no longer safely manage at home, but I can see them refusing to because they want to pass on their house to their children.

The post is so obvious. The problem with IHT is that the money has already been taxed - when it was earned!! - and then the state comes along as says, good job for doing so well, I'll have more of that then. It's a largely disliked tax because it crushes aspiration and punishes success.

How about a 1% extra VAT on online sales, we can raise money and support the high street.

How about a 5p tax on all disposable cups/cans etc. The litter in this country is out of control and we could use that money to clean up.

How about making corporations that do business here actually pay their fair share.

No, it's not a way of avoiding it.

I'm amazed people don't understand how it works.

Estates are valued. If the estate is worth more than 1 million, you will pay iht on the excess. It doesn't matter if that's property or cash

Oh didn't mean to come across sneery @Blanketyre, apologies @nappyvalley1992 just meant that maybe you're in a lucky group of friends/colleagues.

I know there's a big mix in my peer group parents. I appreciate it might not have been so common to rent 50 years ago but it's not hard to imagine with divorce, financial crash causing negative equity and various life situations how some have ended up renting now even those who might previously have owned!