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.

Actually the inheritance tax threshold is £325k, or £650,000 for couples.

I'm sorry, but any couple owning a house and assets worth over £650,000 is well-off by any standards. And yes, I live in London and my family all lives in the South East.

Yes, sorry, you are correct, I put the 2 and the 3 in the wrong order. If you live in London then you should know that £650k is the average house price. The fact that house prices were allowed to rise the way they did is another matter (Browns artificial boom), but that does not make it fair that a couple who have paid their taxes on the money to buy and pay for their home should be taxed, yet again on death.

The dustman's mother's house must have been worth over £325k or whatever the limit was at the time, so he will still have had £325k + 60% of the remaining sum left over and could perfectly well afford to buy his own place if he chose to.

Where do you get £650k as the average house price in London from? Several times on this thread it's been pointed out the average property price in London is more like £270k. We sold our house in London six years ago and it was only a fraction of £650k (with four bedrooms in Zone 2).

Anyone who gets a windfall of £325k + 60% of any sum over that, or £625k + 60% is a jolly lucky person who is doing far better than 90% of the population. I don't see that they deserve any sympathy, much less to be subsidised by people who are less well off?

The dustmans case was last year and his mother had died a year earlier so the threshold was £300k. So you think it is perfectly reasonable that his mother, who had paid her taxes, had never been a burden to the state should have to be taxed yet again. Well it is a good job that New Labour have almost ceased building social housing as we would all want one, there wouldn't be much incentive to work and buy our own home. But then again, most will have to sell their homes to pay for the costs of care in old age.

If you happen to live in the place in the country with the highest rise in house prices, and to be lucky enough to have bought at a cheap price and thus be advantaged by that rise, I hardly see it's the government's fault that you are £000,000s better off.

Still less do I see why a fully grown adult in a paid job who inherits a HUGE chunk of cash by any standards is to be pitied, simply because they didn't get an even huger sum, tax free.

Presumably he could have taken a mortgage to pay the rest of the money, or moved to a cheaper part of London, or bought a flat, or converted the house into flats and sold one to pay the inheritance tax - or any number of possibilities.

When my mother died I was still living primarily at home and the IH threshold was £255k at the time.

My sister and I had to pay IH tax on her house (in the South east and a v modest 2 bed) and I was pretty pissed off at having lost my mother very unexpectedly at an early age, but inheritance tax was the least of my worries. In fact as far as finance went I considered myself bloody lucky to get a sizable chunk of money to start out life with.

I didn't bitch because I didn't get an entire house, tax free.

'much less to be subsidised by people who are less well off?'

Subsidised? How does not paying a tax mean that you are subsidised?

But if we're talking about people subsidising, who did I subsidise when my modest personal pension fund was plundered by Gordon Brown as soon as Labour came to power? Who do I subsidise when I pay income tax (going up as the 10% limit has gone) and VAT? And the ridiculous amount of fuel duty on the petrol I have to buy because we don't have buses round here?

You bet I want inheritance tax rates to go up. I'm sick of being an open wallet. Oh, but hang on, I'm 'middle class'. Married. Stable. Fair game.

because if people who have £100s of thousands of pounds fall into their lap free gratis and for nothing don't pay any tax on it, everyone else has to pay a bit more. That's what subsidise means.

If I pay income tax on every penny I earn, and save it up to pass on to my kids, through property or whatever, I don't want to have my kids to have to pay tax again on that money, it's already been taxed. I think it's terribly unfair, to tax hard earned money twice, in life and in death.

It's a good idea to raise the limits, because it was never designed to be a tax that affected people with 'ordinary' houses. It was a tax designed to hit the wealthy. It's not just the South-East where 'ordinary' houses can be worth a lot - where we live a 4 bed semi with a small garden won't sell for less than 400k. This is not where the tax was designed to hit.

I saw with my parents how inheritance tax can really hit you hard when my grandma died. She left a lot of assets to be split 3 ways between her children, including shares which my dad inherited. But the value of the shares was taken on the day she died. The following week they crashed, and rather than inheriting money, my dad was landed with a bill for 40% of the value of the shares on the day she died, when they were now worthless.

so to clarify, his so called 'inheritance' was a bill for thousands of pounds.

My very normal parents, who live in a very normal 1960s semi are worth around £1million. Some of their money was inherited, some was earned. But earned by them, not by me. If I believe, as I do, in a welfare state, in free education, and a national health service, it must be paid for. And if it's paid for by IHT that seems as fair a way as any.

I think the pledge is a good one in principle, but a bad one given the current national finances.

If you know the state is going to take what you own when you die, instead of it going to those you love, why bother saving at all? It would be much more logical to spend it.

That culture would make us even more of a personally indebted country than we are at the moment.

Inheritance tax penalises people doing the "right thing".

That said, now isn't the time to be promising frivolous tax cuts - and if there have to be tax cuts, there are more important ones.

Inheritance tax is so important to the conservatives because the back bone of the conservative party remains as ageing people, with more than the average amount of money, who want to be able to control what happens to it after their death.

I understand it very well. It was the way that my parents thought. In then end for them the threat to leaving an inheritance did not come from the tax - they did not have enough to reach the threshold, it came from the cost of care for my mother's 8 years with dementia.

This is the big threat that most ordinary families really should care about.

The conservatives scheme for £8,000 to cover residential care costs, sounds good in theory, but the Insurance industry is already backing away from it. They think the sums don't add up, and that it carries a perverse incentive for people who can stay at home with relatively high amounts of care, to go into home because it is cheaper. There is also understandably a lot of doubt about a flat rate charge covering the care costs of a basic home in a place where property prices are low, and a plush luxury home in a mansion in the south east.

I also have grave doubts about any proposals which are essentially opt in. This is exactly what happened under John Major's government, the private insurance policies all failed and that is why by the time my mother went into care the only option was an immediate needs annuity (current costs around £80,000)

The proposals covered in the Labour party proposals in the green paper arrived at by several years of consultation with all the key stakeholders, (I took part in a lot of this personally) are much more coherent and comprehensive. This aims to create a National Care service, which spreads the risk across the population as a whole, and aims to cover not just the costs of care in a residential home, but care to allow people to remain in their own home.

This is going to be increasingly important as all the current thinking about the health service emphasises that it is not good for either of the patients or hospitals that 25% of people in hospital now have dementia and will stay there longer than they need to for any clinical reasons.

I think there is still work to be done the National Care service proposals and people should be studying the fine print and feeding into the discussions that will transform this into the white paper. ( you should maybe invite the minister in charge for a webchat)

People aren't necessaritly going to jump for joy at the price tag, but to my mind, if it is money that we spend to a really good quality care service, and if it means that we ALL inherit just a little less, then we are not going to notice it, and it will be money well spent!

The bottom line then is that inheritance tax levels is something that will be a hot topic around some dinner tables in the south east, but finding the right solution to cover the huge costs of care should interest everyone with money to leave or the hope of money to inherit.

MB, you are right, and just for the record, the insurance industry arent backing away from the tory ltc insurance idea - they were never consulted on it in the first place.

It is from an insurance perspective, completely unworkable. However, when the tories try and introduce their ill thought out twaddle they'll neatly be able to blame someone else for it not working.

as you say, in 20 years time most people wont have anything left to pass on as it will have been sold off to pay for care fees in anycase.

Bottom line is that IHT is really just capital gains tax paid at the end of someones life. In the main, most people leave a house to ther relatives that they have paid no capital gains tax on. Most old people have accumulated large untaxed capital gains due to house price increases during their lives so it seems fair to pay it at the end.

Rich people with significant assets can mostly avoid it via trusts.

I too don't understand all the fuss about inheritance tax being "unfair".

I would rather pay more tax on money I inherit, which I haven't worked for, and less tax on money I earn, which I have worked for.

I get the "double taxation" argument but then that argument also applies to all other non-income taxes - for example, VAT on goods and services (paid for with money that's already had income tax applied). And the Tories are not suggesting any reduction in those taxes.

If the Tories continue with their pledge to raise the (already very high) inheritance tax threshold, this will only cement their reputation as the rich person's party. Maybe that is what they are aiming for.

Quick answer, yes!