Tories plan to scrap inheritance tax for estates up to £1m is to cost £3.3bn!!!

[PSCMUM]

please tell me, fellow mumsnetters, that you see how awful this would be for public services???! PLease tell me you are less self preservationist than the 2 (pinstriped) aresholes on the tube with me today saying how great it would be as they would get so much more of the value of their parents houses when they died!
I bloody can't stand tories, but this policy is worrying me as it is so appealing as long as you don't consider how they are affording to make such a humungous tax cut - ie, cutting public services. Doctors pay, nurses pay, schools, hospitals, fire engines, lolly pop people, income support, legal aid, free wine for deranged left wingers on mumsnet (ooops, maybe last one just wishful thinking)

Will address your points in a min SP when I've got a bit more time but had to respond to "why don't you move down the road" in conjunction with PSCMUM's plea for the poor people - what is you definition of poor? There are so many people in our area who earn peanuts (think earlier example of PIL/BIL) but have a house now worth something (apparently not through hard work ). Presumeably you do not class them as poor because they could conceivably sell up (paying stamp duty) and move far away to get more for their money. But BIL is self-employed with a client base in this area. So maybe he should go on the housing register and get council housing worth....you might be taking the money away from people on one level but you'll surely be giving it back on another.

This subject makes me scream because no, we don't live in Mayfair (although the cars round here certainly make me feel like it most days) but it's where PIL live and we are hanging on by our fingernails to stay near them and look after them in their old age. What a hilarious, outdated and money-grabbing notion.

would you call Hammersmith normal? Or Wandsworth?

By my quick reckoning, the IHT limit at the mo versus being raised would mean a difference of £10k to BIL. That is a huge difference to a low earner but hey, he's rich though, he lives in the SE!

No, I;m not saying anyone with a house now should sellup and buuy somewhere they could get more for their money. I am just saying that they will not need the money when they are dead, but others will. IF their off spring are in need, they will get it redistributed to them via the tax system. If they are not, then they will be fine anyway.

I don't resent people for owning a house - I own a house. But tax is sharing. Tax is sharing with people less fortunate than yourself, and it is sharing with people less fortunate than yourself when you are dead. COME ON!!!

Zog, there is not IHT payable on the first £300 k of inheritance. That is clear. DOes your BIL need more thatn £300k to buy a house for himself? Does he have absolultely loads of pairs of shoes?

There's four of them.

And it's his home.

And no, he doesn't have loads of pairs of shoes

why is it fair that people who put all/most of their spare money into their house in their lifetime as an asset to leave their childrne have it taxed at a massively high rate. People earning the same amount who spend their money all their lives rather than save of invest only get taxed at say the VAT rate on their spendings 17.5%, quite possibly leave their children hard up. How is that fair, that prudent peoples estates are taxed to pay for the people that spent their money?

UNtil I see a Government put together what I think is a sensible budget to spend our money, I am still firmly of the beleive that the less they have the better and that it should be limited to necessities like education, health and housing. All use of public monies for grandiose IT projects should trigger an immediate general election. If I ran projects like the government does with so little accountability I'd be out of a job pretty fast.

I'd have more respect for your views PSCMUM if you didn't resort to snide silly comments like "Does he have absolultely loads of pairs of shoes". But then I don't suppose you care very much what a greedy bastard like me thinks.

personally I think like capital gains tax your principal private residence should be exempt with a much lower threshold on all other assets - say £150,000

Oi, KC, it was me who used the phrase "greedy bastard", so leave PCSMum alone. And no, I don't particularly care what you think, but I doubt you care very much what I think either.

I didn't say she did say it (confused emoticon) why is it relevant who said it? Though for the record she did talk about "sheer greed" which is I think quite a similar sentiment without the "bastard" tag (which isn't technically correct in my case).

there are plenty of people views I disagree with both here and elsewhere on Mn and often I do care what they think. I don;t have a problem with people not agreeing with this proposal and I can see for people who don't live in the south east that it sounds elitist and irrelevant.

Don't like this kind of argument though. That anyone who disagrees must be a stupid greedy person who buys too many shoes like ZOG BIL. Time for me to leave (again) I think.

but zog - my point is that he'll lose his home when your pils die anyway because he'll have to share it with his siblings. he'll get 100k rather than 110k - why is that so bad?

kewcumber - wandsworth is expensive, but the average price isn't 500k yet. news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/bj.stm

Hey Ive got an idea - you inherit a house over the inheritance tax threshold and if you don't have enough money to pay it from the rest of your inheritance - get a mortgage secured on your new house or sell it and buy somewhere cheaper

I'll be ok though as my parents have got three houses and only two children

he won;t had to share it with siblings if parents leave it to him - there is no compulsion to share your estate eqally in thsi country. EG if a child gave up their job to look after you in your alst years it would be perfectly reasonable to leave them a bigger share of your estate.

I stand corrected on Wandsworth it isn't quite £500k

I've not had time to read the thread so apologies if I am interupting a flame war

I think the Conservatives proposals are disgraceful and have now changed my mind about voting for them on that basis. It would be much better to tax e.g. young families less than reduce the tax burden of the wealthy deceased.

Nobody has earned the massive amount of equity they have aquired during hyperinflation of house prices.

ok then kewcumber - he could get a 40k mortgage (maybe with a guarantor).

my point is really that property prices are irrelevant because no-one depends on an inheritance to get a home. I do think that you should be able to defer iht if an heir wants to live in the home, but I think in essence it's a fair tax, and that they should reduce the threshold - maybe introducing a 20% band.

haven't read all 244 messages BUT
why isn't there an inheritance tax threshold PER PERSON? i am one of 4 children, with 10 or so grandchildren. I am sure my parents will spread their estate between us. Surely we should all be able to inherit up to a threshold which would encourage people to spread their wealth around when they die.

So kewcumber if his parents left all the house to him and not to his siblings he is really sitting in clover. All he needs to do is get a £40K mortgage out on the £450K house, which should be feasible even for most low earners I would have thought with that amount of equity and he is sorted. Or alternatively since he is living with his parents one would assume that his cost of living is relatively low and he could start saving towards that 40K.

If his parents do spread their estate evenly, then he has much more of an issue with his siblings than with the taxman.

Well I live (for the moment) in the SE and I still strongly disagree with this. We pay 40% income tax and are just about to pay 4% stamp duty yet I still see this as one of the fairest taxes.

I just don't get this concept of expecting an inheritance from our parents. My parents live in the SE in a house they paid next to nothing for which is now worth silly money. I'm not expecting or looking for any of it. I think they should sell it now and release the equity whilst they're both still healthy. They should then travel and spend it frivilously in a way they couldn't afford to 20yrs ago.

You are not taxed twice. Your parents paid the original tax.
You only pay IT on the amount above 300k so if the estate was 400k, then the tax is just 40k. Therefore, those inheriting still get 360k. It's utterly shocking for people to spout things like, 'that wont buy much in the SE!' Whoever said it was suppose to buy anyone anything? It's a nice little windfall to arise from a sad occasion.

I find it sad and disheartening that so many people seem so wrapped up in their own lives. That so many people look at each policy announcement and just think, 'how will this affect me? What will it cost me?

cazzybabs - I'm not sure I follow you. Why would you have to sell your house to pay IHT if one of your parents died?

amidaiwish, there is a piece about this on the Guardian website by Polly Toynbee; one of the respondents on there suggests that instead of IHT, any recipients of a windfall like this should be taxed on it at their then highest rate of tax - so someone with a small income would only pay c 10-20%, but someone with a much higher income would pay 40% (and that would be on the whole of their share, not on the surplus over £350K)

Sounds v fair to me - how do we all feel about that? It is unearned income after all.

Cazzybabs, if one of your parents were to die, the other would inherit without any I.T liability as spouses are exempt.

I don't understand why you would have to sell your house even if you lost both of them? You would pay IT on any of the estate above 300k and pocket the rest.