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)

No TellmeMater - I was playing devil's advocate. I suspect that some of those who are outraged at the inheritance tax thresholds being raised because services suffer to the tune of £3.3bn would not actually want to pay a 1p in income tax themselves. It seem to be that some are happy to others pay for the greater good of the redistribution of wealth so long as it is not their wealth.

Nice post FCH.

Well qofq that is really down to individual choice? Some-one rattling around in a big house could either downsize or do some sort of equity release. And these days often it is grandchildren trying to get onto the property ladder not children.

However I suppose over time there will be a shift and whoever mentioned the fact that our generation do not have as good a pension set up as the previous generation made a good point. My final salary scheme is being stopped in the next few months, for instance.

FCH - Your calculations on the million quid are wrong. If you did leave a million - your taxbill would be £280,000 more than double what you said.

I can't afford to own a house in London and a pension and childcare. One had to go...

I don't like this idea and think it is too populist. Ultimately you get £300K for nothing and 60% of everything over that. To me, that is an awful lot of money even if you have to share it. You're effectively getting something for nothing. I know your parents have worked and it's taxing money which is already taxed but frankly that's the case with lots of taxes - fuel tax, alcohol tax, VAT, stamp duty and most annoyingly, council tax.

It's a pity that the Tories don't do something more useful such as look at long term care. Effectively that is a 100% tax on assets over £16,000, penalising people who have worked hard all their lives in their lifetime and because they are ill. I would much rather see that reformed than IHT.

That said, what DOES need reforming with IHT is the fact that the tax becomes due immediately. It's inequitable to turn someone out of their home because their eg sister has died. The tax should only become due on the sale/gift of the asset.

I would certainly pay 1p more income tax if other taxes could be reformed. VAT is really unfair as it's the same for everyone regardless of income.

Good point hellywobs. Two people could earn the same money, make the same financial decisions, and due to variations in health in their old age, one could leave a £300K plus estate and the other could leave either nothing or very little.

Furball, as a married person with a joint estate provided you make provision to use the nil rate band of both partners then (and I am assuming we both make it to a reasonable age etc) with the use of a discretionary trust there is a double lot of nil rate tax, and working on the increased £350k rate from 2010 this means that the first £700k would be tax free, leaving £300k liable for tax at 40%, meaning a tax bill of £120k. And I know not everyone is married, but most of the retired people I know living in houses worth significantly over the threshold do own them jointly!

Like my mother. Her home had to be sold to finance her nursing care. And she wasn't sitting in some posh residential home - she had cancer.

My mother got hit with a 'life sentence' cancer diagnosis last year. She is worth over the threshold. Why shouldn't she be able to give it to me? At 56, I expected her to be around a while longer.

I hate the Tories, and have been a good leftie student in my day, but I don't see why my mother's hard earned money is anyone's but hers. It has already been taxed.

OK, thread has probably moved on as I've only read the first 50 or so posts but it is patently no longer a tax on the rich. My blue collar FIL and dinner lady MIL own their own small house and live on their state pensions. Because of where they live, their house is now worth in the region of £450,000.

My BIL still lives with them and is also a manual worker. When they die, due to IHT, there is no way that BIL will be able to buy his siblings out or even stay in the village where he has grown up and his family have lived for 100s of years. The value of housing is all relative - if you want to stay where you've always lived and that place happens to be in the SE, it's tough sh*t really isn't it?

And btw, have never voted Tory.

"Personally I'm delighted that we might make a bit of money when our hard working/hard-saving parents die"

Nice

But gets to why so many people get het up about this.

Have now read the thread. So DH/BIL etc are "greedy bastards"? Don't make me laugh. The average house price where we live is £500,000. FIL built his house himself and it's got two bedrooms so given as they have BIL living with them, they couldn't move to anything smaller. I think IHT is a fair tax but I think it is aimed at completely the wrong people now. Whoever suggested a tax rate based on your postcode had it spot on.

Totally agree, MylittleFreya.

Haven't got time to read the whole thread>

Interesting comment in todays guardian - Most people don't actually die owning huge estates as they are likely to down size as they get older buying smaller properties, giving gifts to family and living to augment their pensions. So the amount of estates where inheritance tax is paid (also remember it is just the tranche above £250k not the whole estate) are actually much smaller than you think.

Also it is not the only tax that is levied on already taxed income ie: VAT.

This is total vote mongering from a conservative party devoid of ideas

but zog - you say your bil would never be able to buy his siblings out anyway. IHT doesn't actually really affect him at all, except that the total estate will be 410k instead of 450. his share would be, what, a half, a third? it's still a pretty good windfall, whichever way you look at it.

also those who go on about being taxed twice: (I've said this before but I'll say it again) in most cases, the money was never taxed in the first place because it has arisen from rising property values. even if it was taxed, the IHT is payable by the heirs, not the deceased (seeing as you can't take it with you), and money is usually taxed again at the point where it is given to someone else.

500k average price? where do you live? mayfair? why not move down the road?

also i don't think anyone said your fil and mil were greedy bastards, but rather their heirs who don't want to pay 40k out of 450k. I don't really have any sympathy I'm afraid.

o ffs mylittle freya - the entire value of your mother's house is not being taken awway from you. She will be able to give all but a MINORITY of it to you, the rest will go to the state, and will in most cases be far less than you or she will cost the state in your lifetimes.

god almighty, where do all you people think the money for public services comes from??? If the tory bastards get in and push this trhu, lots of people who are getting a windfall already, will get a bigger one, at the expense of many poor people, not just here but all over the world, our humanitarian aid budget could suffer, our NHS budget, our education budget, our police budget, you name it!

Tax means sharing with people less well off than yourself. If you are arguing against this you really need to face up to that fact that you are essentially arguing that you do not want to share with people less well off than yourself, to the extent that you do not even want to share with them WHEN YOU ARE DEAD. That is seriously greedy!

i totally agree with this posted earlier:

'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.

bluestocking, do you have any wine?
can swap for cold and only slightly eaten pizza?

lol at the idea that the average price of a house in mayfair is £500k. Don't live in London I'm guessing?

Sorry, no wine; the Bluestocking household is dry. I can offer you a very nice cup of tea though!

It was a joke. I'm not sure there are any normal areas where the average price is 500k though.

just to annoy people I would vote Tory to get rid of inheritence tax - my parents (who are by no means rich but are comfortable mum is a teacher, dad manager) lent us money to buy our house. I am a only child - the money came through their bloody hardwork and good share investiments. If one of them died now we would be screwed and have to sell our house to pay inheritence tax - so yes it is selfish but I don't want to lose my house.