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)

Exactly, bluestocking! "some people"? Blimey - houses like that are what millions of us live in (and glad to be able to!)

Oh, ladidah, a SE England benefit. Because we all know that only toffs live in SE England.

"then more than half the house-owning population own houses valued at less than £350K"

yes but as DH pointed out last night - most people who have/had a mortgage also had life insurance - which in some cases is worth more than the value of the home, then there's pensions and other 'funds' which are "there" but don't actually make you feel any richer - but makes you worth more than you think. - DH isn't sure how much his pensions (are he's got 2 - as one was non transferable when he moved from his old company) are worth - but once the mortgage is paid off (with the life insurance) and the surplus from the LI he's already worth approx 200k - and he's "only" 33 (though he's been trying to confuse me lately and say he's 34

"I think careful planning and giving it all away more than 7 years before you die (obv that could not work!) should result in paying a minimum of IHT. " - unless what happened to our family friend happens to you - in that your children die unexpectedly and you get the whole lot back again - and she didn't even give everything to her son to avoid IHT (it didn't actually "exist" in it's current form when she gave him the bungalow lol).

No, not la-di-dah-only-toffs-in-SE-England; but SE England is where the Tory toffs (like Cameron & Osborne) are based and what they know and understand. North of Watford Gap is uncharted territory for them (they will have flown to Blackpool to avoid all the streets full of "houses like this" )

I just read that George Osborne article and I am in imminent danger of vomiting up my lunch.

I am still baffled why it's ok to tax my earnings, but not someone's windfall, gained through luck of location and circumstances. And don't give me that baloney about people having scrimped and saved to buy their homes. Some people may have, but many others, particularly those in their 60s now, bought when housing was cheap and just got lucky.

this average joe thing is such a red herring though isn't it?
if only about 5% of estates pay IHT then how can that be "average".
it is a tax bribe to the very comfortably off, the top 5% of the population. who aren't average at all.

thing is I honestly find it hard to believe that only 5% of the population is affected by IHT......where are these figures from? Are there really that many people giving everything away more than 7yrs before they die, or spending it friviously on themselves in retirement???

this article seems to suggest it's more like 40%(ish) - and with the 6% figure coming from the (ex-chancellor - now PM) Gordon Brown I'm not sure I particularly believe it.

The government is already making billions more money out of property ownership because house-price rises have brough so many more pwoplw into the Stamp Duty bracket, and so many more houses are now in the upper Stam Duty brackets.

Now they benefit disproportionately because the value of a house is reflected in the % paid in IHT. In cash terms the gvts income because of taxes on property must have skyrocketed over the last 10 years. But in actual terms, people only have the same modest house. if they are lucky.

So, where would all this public service money have come from if house prices hadn't become so unreasonable?

And the value of a house in cash terms has to be paid for - nowadays by someone taking out a 100 year interest-only mortgage in their 20's - the amount of work and payment needed to buy a hjouse is vastly inflated since my parents bought there house.

I don't know what I think overall - you can't look at it as a standalone issue.

"And don't give me that baloney about people having scrimped and saved to buy their homes. Some people may have, but many others, particularly those in their 60s now, bought when housing was cheap and just got lucky. " - yes, but isn't that why now people need inheritance more than they ever did, because without it it's so hard to buy? People now in thier 20's will be the ones hardest hit by IHT because it will be them that need it most to buy something pretty unpalatial!

I think it is greedy for people who would have been wealthy even without house price rises to be moaning on about it...but i do think the threshold should rise substantially to bring 'ordinary' folk out of it. Especially as the gvt are making billions from the very same houses in stamp duty.

Anyone who has a house worth £300K or more should look into setting up a discretionary will trust.

There is always the possibility that the parents could die when the children are small and the estate would need to be used by the guardians to bring up the children. I think IHT is harsh in these circumstances

'hmm, lets see, we've got, ooh, 3 billion pounds...which major problem in society could we really do something about wiht that kind of cash? I know - those folk who are already in line for a quarter million pound unearned bonus when their relatives die - we'll give some more to them!'

Genius.

I think it is unfair and the govt should tax buy to let whether they are in profit or not and regardless of whether the income covers the mortgage.If you can't afford to be a landlord don't

Elliot, who exactly is "we". You say "...we'll give some more to them". Do you mean the government? If so, I think you are under an illusion that it is their money to begine with.

When you say "We will give to x" that suppose that "we" own the thing in the first place.

And people keep talking about what this tax reduction will "cost" the government and the rest of us. Erm... it isn't our money to start with.

In viw of all of this, what is going to happen to buck palace when the queen dies? Wil Charles have to sell his sole to pay the taxes? Or are we going to sell the palace to a nice Russian Oligarch/

also I could be wrong - but I think that in the grand scheme of things (ie the money in the budget) £3.3bn isn't a big amount of money (though it sounds it to us mere mortals ).

I've been trying to find how much was allocated to health/schools/etc in this years budget but am going round in circles finding very long (and boring) political speaches

QoQ that article talks about people's current wealth, not people who are dying.
and the figures are public knowledge anyway.

NHS Budget from bbc

2002-03: £65.4bn
2003-04: £72.1bn
2004-05: £79.3bn
2005-06: £87.2bn
2006-07: £95.9bn
2007-08: £105.6bn

education budget from the guardian

Education spending in England to rise from £60bn this year to £64bn, £67bn, £70bn and £74bn in successive years

Hm...don't understand much about this...but...lets say someone actually is fortunate enough to leave £350000 and there is £20.000 of that deducted because of income tax....whilst, for me even £20000 is a large amount of money....considering there is £330000 left over....it really isn't that bad...especially considering what that tax will pay for?
Now how all teh services are run, etc...is a whole different story, and of course I htink most public services could do wiht a major overhaul, really looking on how to make them more effective...!

I do agree though, that if the person that inherits the house is actually the person that would live there, or has lived there (i.e. like QUOQU's example), then it should be handled differently!

whether you are pro or anti tax (or where on the spectrum you sit) ultimately comes down to whetehr you think the government does a good job in spending your money to redistribute income and provide services.

Personnally I think most governments are rubbish at this (witness numerous abortive and expemnsive IT debacles). They aren't Robin Hood stealing from the greedy rich to give to the deserving poor. The money is just as likely to be spent on an IT geek developing a system that doesn't talk to any other systems being developed which then gets binned.

Any money I inherit (which hopefully won;t be for a very long time and hopefully she will have spent it on herself before then anyway) will be redistributed to many deserving working class buildres to build an extension. Much more direct redistribution of income.

lol Kewcumber, agreed.

£14bn for a barrage that would harness the tidal energy of the Severn estuary

from teh bbc

NHS £6bn IT system poor value, say experts

from the guardian

3.3bn doesn't go very far these days does it?

Oooh, iota, I had a GP on the phone at work the other day and he reckoned that the money wasted on that IT system would have paid for 6 new hospitals. He said they'd rather have had the hospitals