Does anyone think that the Tory plans to increase inheritance tax are a good idea?

[morningpaper]

Just curious really.

Apparently the rate is actually £2 million for couples (e.g. 1 million each).

Particularly if the wealthy can pay £8k at retirement in order to ensure that they won't have to sell their house to fund any residential care (I do think that anyone who can easily do that is reasonably wealthy).

This means that more LIVING people will have to pay tax because we aren't taxing the dead anymore.

Why IS this such a popular idea? I don't understand.

Unless he's going to do a big "pro-marriage push" and sideline single mothers/civil partnerships onto a lower tier...

Exactly, mp, death is the only time where unearned income is taxed. Anyone who has owned a house for the past ten years or more is sat on a lot of unearned non-taxable income as a result. Your main home is priveleged in terms of tax during your lifetime. If you make any other investment, it is subject to tax like earned income. Hence the existence of ISAs.

Unlike the rest of us mugs who pay tax on all our earned income throughout our lives.

And as for letting people live in the house and only pay tax when they sell it. You would get loads of people moaning saying that they are 'forced' by the bizarre tax laws to live in the same house for generations, in the area their parents lived in.

etc etc

People will always moan about tax, but in the case of IHT I think it is a fair one on the wealthy> It is relatively painless except for the greedy and lucky inheritees, who rather than thinking "Gosh, aren'y I lucky that I am getting a huge inheritance", think "the nasty tax man is stealing what is rightfully mine from me".

Harumph.

Perhaps if I was sat on a huge pot of gold that I wanted to use to further advantage my already hugely advantaged children over the rest of the population I would feel differently.

It seems to me the more people have, the more disgruntled they feel about paying tax???

Well said cloudspotter.

cloudspotter - I pay tax on my house every year council tax is a tax on the size and value of my house. I have paid tax on the house I live in for the last 11 years, regardless of whether I own the house or not I still have to pay it

I don't object to paying tax, I see it as a civic duty and I am pleased to contribute. My issue with IHT is that it is essentially a voluntary tax: the very old and/or wealthy tax plan and the owners of 'estates' don't pay it it all. The people who get caught are those who inadvertently fall into the IHT bracket - because they die young, or because they are 'middle incomers' who don't think to tax-plan (despite the media hysteria about it)

I don't object to very wealthy people paying more: stamp duty deals, to an extent, with high property values: perhaps a better way of raising money would be capital gains tax on one's home, too. So they older generation end up paying a bit of their massive unearned gain back into the communal pot? That is much less easily avoided and so arguably fairer.

IvyKaty: council tax is not a tax on the size and value of your house in any way meaningful to this discussion. Using bands of house prices is an extremely crude, ineffective and unfair way of calculating a tax that is used to pay for the local services that you will use because you live in that house. It does not tax the wealth you have in property. I don't own any property and I still have to pay council tax. Under your logic, I'm paying a tax on my landlord's wealth.

Then why do we pay different amounts of council tax according to the size of the house we live in? You pay council tax on the size of your landlords wealth and your ability to pay the rent on the size of property.

It may well be a crude method of calculating but it still a tax on your property. Crude methods have often been used going back to the 1910 Llyod George doomsday tax books or window and hearth tax further back.

council tax does not reflect any increase in property values as revaluation is so rare - can't think when it was last done but early 90s?

I pay the going rate for a rental property around here. My rent would cost the same regardless how much I earned. I guess I could rent a bigger house, but I don't need a bigger house and don't want the extra cleaning that would bring. I can't, however, choose to rent a cheaper house than this. My income has more than tripled in recent years but that didn't change my council tax (made it much easier to pay though). However, DP moving in has increased my council tax bill, even though he is unemployed and has no income.

The problem is not simply that it's a crude tax but that it's an unfair tax in that it really doesn't bare any relation to how capable people are of paying it or how much the household consumes in terms of services. It's a truly horrible tax but, unlike inheritance tax, it isn't taxing either income or wealth.

I think it's a dreadful idea.

Inheritance tax is the fairest, least painless tax there is because it only taxes the money people DON'T need by definition.

Talk about feathering your own nests.

sorry, least painful.

And that was regarding IH. I see the discussion has moved onto council tax which is ALSO iniquitous in my view.

How is it fair that band H council tax in my borough is only 3 times the lowest band, yet the most expensive houses are more than 20 times the price of those in band A?

It was stated that houses/property is not taxed - it is taxed by a crude uncouth system of council tax/old fashioned rates developed on the size of your house and value back in the 1990's

IHT can be money that is needed, it may be a home and tax has to be paid at 40% over the threshold, meaning an unmarried partner would have to cough up, if there isn't the cash then the hosue must be sold - great stuff

If both of us died together, why should my 11 and 12 year old be taxed? We are not 'rich' but we live in the south and our modest house and savings take us over the limit.

Sorry kids, you've lost your parents and now the chancellor would like to tax you.

"it may be a home and tax has to be paid at 40% over the threshold, meaning an unmarried partner would have to cough up"

Not if they'd ordered their affairs sensibly - if they had a joint tenancy then the house would just pass to the surviving partner, it doesn't form part of the estate.

That could happen with a dependent child, I agree.

Capital gains from house price inflation in your principle private residence are not taxed.

There are plans to change the law wrt unmarried couples although tbh there is a real argument that if people want the legal rights of marriage, it's fairly easy to actually get married (and awarding legal rights to people who live together might catch out people who don't actually intend to hand over their inheritance to the person they live with anyway).

There is an issue re. occupants being made to leave their home when the owner dies - possibly the law needs adjusting to give these people the right to stay in the home with the tax bill deferred until they move on. But that does not in itself make inheritance tax unreasonable.

Your dc could be made to sell the house to pay the 40% tax and then all the time it takes to sell the house your dc will be made to pay interest on that money. Unless you left enough cash to cover the 40%

well yes, if they were adults and our house was worth over £650k (since we are married). If ds becomes an adult who stands to inherit over 650k I think it's entirely reasonable that he should pay tax on it!

We pay a lot of insurance money each month to make sure this wouldn't happen to our children. I would love not to have to pay this.

but the point is that everyone gets to pass on a very sizable chunk UNtaxed.

It's only the estate above £650 (in the case of a couple dying simultaneously) that is taxed at 40%.

Obviously it would be very sad for your children to lose their parents but are you seriously telling me that situation is worse than a child whose parents die in council accommodation with no house and no savings? Oh, but look on the bright side kids, at least you don't have to pay inheritance tax

Whichever way you look at it, your children would still have £650,000 plus 60% of everything above that threshold. That's hardly peanuts.

And in case you think I don't know what I'm talking about, my mother was a single parent and died when we were quite young, and my sister and I had to pay inheritance tax on everything in her estate above £325k. So I am not arguing this from a nimby POV but from the POV of what's right and fair for society as a whole.