Oh what a surprise - Tories say inheritance tax unfair

[WendyWeber]

BBC

What do they mean, ???

They are a damn sight richer than those who own no property and have no estate at all

Niecie "Depends what you call rich. In the South East it could easily be the case that somebody is living in a house that has appreciated in value over a large number of years. They may have no other assets other than the house which isn't by any stretch of the imagination a palace and yet their family have to stump up inheritance tax when they have no cash or assets either.

Obviously there are people who would be very grateful to have the problem of having to pay inheritance tax but that doesn't make it fair that the threshold has hardly changed for years."

The family are presumably "stumping up" part of their inheritance. That the house is not a palace but is worth significantly over a quarter of a million does not indicate a problem with inheritance tax thresholds, but rather with the housing market.

Hyper inflation in house prices makes the rich richer, and makes it very hard for ordinary young families to live comfortably in the UK. Inheritance tax takes some of that unearned wealth from the relatively rich - would you rather it came from our hard-earned incomes?

Some people work hard to make themselves rich or even just financially independent of the state. A modest three bedroom terrace house in the south east can easily cost more than 285K. There are families in my area where both parents work full time to pay the mortage of these houses.

My parents bought their house for 19K, but BOTH of them HAD to work damm hard to pay for it. What a lot of people forget is that salaries were a lot lower in those days. People also struggled to buy houses in the past.

However there are people living on benefits in houses that are similar. They don't do a day's work in their life, but get their housing paid for.

What is needed is a reform of our benefits system. Prehaps some form of work fare for people who have been on benefits for more than six months. It is ridicuolus that there is not subsidised childcare to allow single mums to go to work at least part time.

And, yes, when we say reform the welfare system, let's start with corporate welfare.

Of course selling off council houses may have done wonders for those living in them at the time (and for the Tories getting the votes from a lot of those living in them at the time) but it will have contributed to house price inflation and - of course - left a huge dearth of public housing for those who need it.

I will never understand the reasoning behind the money from the sale of council houses not being allowed to be used to build more public housing. That was just perverse.

I think elderly people living in huge houses really need to move to something smaller and make these houses available for families - I'm sure that's one of the factors clogging up the housing market. My father and father in law both live alone in huge family houses and will not contemplate moving. Of course I understand their reasons, but I do think its something that contributes to the housing shortage.

tories' true colours coming out here.

Only 6m people pay inheritance tax...yet they want to abolish this rather than abolish the lowest rates of income tax which mean that old ladies living on £10,000 a year pay tax

I stand to benefit quite a lot from any abolition of inheritance tax and yes, my mum worked hard to pay for her house. But frankly, she didn't work hard to ensure London house prices went barmy. This is not money anyone has "earned" in the true sense and nor is it money that I "deserve" though I would love to have it.

Crap daily mail politics through and through.

totally agree with last post

It is a problem in Cornwall & Devon. The difference between hosue prices and wages is the highest in the country here- because of the very recent influx of 2nd homers scrabbling for a bit of the coast. We took a trip to a Cornish seaside village in October- it was beautiful but empty - all the houses had signs up for holiday lets. There was one old lady visible in a thatched cottage overlooking the sea. Her house was up for sale- 2 bed - £ 750K This was an old fishing village, the only shops remaining were a newsagents and then a swanky coffee shop & some art galleries, saddest place I ever saw. Like little mayfair in summer I suspect.

i know of a teacher who wanted to move into her parents 4 bed (modest) house when they died. She couldn't because she couldn't afford the IHT. There was no estate with the house to pay the IHT.

The tax system is wrong at many levels. I do think the threshold needs to be raised (it's not a tax that raises much TBH - most of the truly rich avoid paying much IHT because they get their affairs properly sorted plan for their deaths and protect their assets, it's the ones who have crept into the band with the ridiculous house price rises who have to pay), but I also think the threshold for paying higher rate is too low, and for paying any tax is too low. This country is shockingly expensive now.

Agree gess.

Great post, gess!

Prehaps there needs to be a tax on unoccupied homes. Or maybe higher stamp duty if you are buying a second home.

I can't make up my mind about the buy to let market. On the one hand there is a need for people to rent houses and flat without the long term commitment of buying house. Yet too many buy to lets squeeze the first time buyers.

'Prehaps there needs to be a tax on unoccupied homes. Or maybe higher stamp duty if you are buying a second home. '

You'll never see that under a Tory plan.

Whom do you think owns all those unoccupied homes?

If IHT is due 6 months after the death but the main asset (a house) hasn't sold, how does Inland Revenue assess the value of the house, and therefore its contribution to the estate of the deceased?

I think it's too late for Devon and Cornwall. Whole villages have been destroyed by 2nd homers. They are beginning to develop more 2nd home complexes- like Carlyon Bay, and lots of lodge homes (a fllash caravan for 170K - hmmm bargain) which hopefully will help. A lot of the villages are too expensive for young buyers though (and they can't inherit as they can't afford the IHT!)

Sorry if repeating but you can pay teh IHT over 10 installments which are annual not monthly. Agree with you WW on this. The house is assessed as soon as probate process starts. Am going through all thsi atm re my mum's house

WEndy - people in the SE only 'benefit' from house price rises if they move away to a cheaper area. If they - and / or thier children stay in London, they are left with a lesser proportion of the price of a house than they would have been if IHT had risen at the same rate as house prices.

So....when we die DS will be left with a much lower proportion of the price of a house than if we had died before house prices rocketed, or if we lived in a different area of the country.

I'm not complaining massively - IHT by definition taxes those who have at least been abl to affor property, so are lucky. But it is been boughth with taxed income, had sky-high stamp duty paid (which hits London buyers so much harder because of the price of houses)...the level of taxation is proportaionately much more on the same 3 bed house, say, if it is in London.

I think IHT should be raised in line with house price rises.

DP and I are not married and own our house as tennants in comon. Thus we can each leave an amount up to the threshold for DS. Not that our 'estate' amounts to twice the IHT level!

I think £285k in capital is a lot of money in any language and it is perfectly reasonable to tax that kind of gain.
possibly at, I don't know, 100%

It's 300k now. 300k which most people get for being lucky enough to have parents who could afford to buy.

our solictor said the best way of avoiding inheritance tax was to spend it!

no point leaving any money in your will if you are lucky enough to be in that position - you may as well enjoy it - of course in an ideal world, you'd know exactly when you would die so could plan accordingly....

If you have an estate above the threshold, make sure you have decent tax planning will smad eout. This way you can start to avoid some of the IHT problems. A good solicitor will be able to help save you lots of money re IHT.

popmum - that is very often the case. Making gifts in advance, stuff to do with your house owenership, lots can be done.

yeah and I'll be doing it

robbing bast*rds

I agree completely with gess about income tax rates. There was a radio prog on recently about our standards of health care and education compared with other European countries which pay more in income tax (I'll ignore indirect taxation for now!)

The programme mentioned how in polls most people say oh yes, of course they would be willing to pay more in tax for better services; but when elections come round, all the parties (except Lib Dems but they're never going to win anyway, yadda yadda) say they will cut income tax - or at least maintain present levels - and everybody votes for that

Maybe there should be 2 levels of IHT - one for the SE, with higher thresholds, and one for the rest of the country (I can imagine how that would play in the shires )

or just sell up and cruise round the world, two fingers up to the treasury everytime you pass southampton!

"I think IHT should be raised in line with house price rises."

Surely no one could disagree with this statement?