Gransnet forums


To not understand this at all ( inheritance tax related)

(80 Posts)
GrannyTwice Sun 12-Apr-15 18:39:25

1. The Conservatives plan to raise a £1bn by restricting tax relief on pension contributions for those earning over £150,000
2 . They then plan to give this money to the 22,000 families with homes worth over £1m who leave these family homes to their children or grandchildren

am I missing something?

vampirequeen Sun 12-Apr-15 18:52:05

It's a pretense of being on our side when really they're just moving their friends' money around.

"I say, old chap, do you mind awfully if we take some money off you by not giving you some tax relief on your pension payments. Don't worry though because young Tom will get it all back and more when he inherits your estate. Bit of a hoot really because all those plebs will actually think we're making you pay more."

durhamjen Sun 12-Apr-15 19:11:01

Exactly, vampire. Most of us will have had to sell our homes to pay for care.
Those with £1million homes will usually have enough money not to bother about care fees.

durhamjen Sun 12-Apr-15 19:13:38

"The Tories suffered a blow on Sunday when the Institute for Fiscal Studies warned that a pledge to raise the inheritance tax threshold on family homes to £1m would disproportionately benefit richer people.

As David Cameron tried to reset the faltering Tory campaign by declaring that he was championing the “Conservative dream”, the IFS described the inheritance tax pledge as “rather odd” special treatment for homeowners.

The criticism from the IFS came as George Osborne failed on nearly 20 occasions to explain how the Tories would fund a commitment to provide an extra £8bn a year to the NHS by 2020."

The IFS were not taken in.

GrannyTwice Sun 12-Apr-15 19:30:33

Trying to work this out is making my head hurt. Why are family homes being treated differently from any other assets? Aren't family homes the most under taxed of all capital? Ie no capital gains, ludicrous council tax system for more expensive properties? What if you want to downsize to an under £1m house? what if you left your family home to a charity and not a child/grandchild? This is going to end in tears methinks.....

JessM Sun 12-Apr-15 19:52:16

They think they are doing badly in the election campaign. So they are firing off random ideas, without any coherent plan behind them.
They reckon they are going to cut £12,000,000,000 off the benefits budget without any obvious or clear plan to get anywhere near that figure.
Sounds like the perfect moment to reduce taxes on fairly wealthy people.

durhamjen Sun 12-Apr-15 21:35:12

It only affects about 20-30000 estates. Not a lot of votes in that. They have obviously wildly overestimated, as usual.

GrannyTwice Sun 12-Apr-15 22:20:42

I know you're right about it only being a relatively small number of estates but are they hoping that many of their supporters will just think it's a good thing per se without understanding that it won't benefit them. I agree Jess, it's a sign of being very frit - after the EM Sex God thing, they really don't know what to do next!

FlicketyB Sun 12-Apr-15 22:24:39

The policy is to give money to those with houses valued up to £ 1 million. It will affect approximately 20 - 30,000 people a year the value of whose house exceeds the current joint Inheritance Tax allowance of £650,000. Those with properties worth more than£1 million will still pay Inheritance Tax.

We will benefit from this if it goes ahead, however, I can see no justification for it whatsoever and, in my case, far from making me want to vote Conservative in gratitude, it makes me more determined not to vote Conservative to show my contempt for such pork barrel politicking.

jinglbellsfrocks Sun 12-Apr-15 23:01:40

It applies to homes worth up to one million pounds.

When people have worked hard, saved, and paid off a mortgage, why shouldn't they be allowed to pass on their house to their children without the taxman taking a cut? With house prices being what they are today, it will benefit a lot of families.

durhamjen Sun 12-Apr-15 23:13:19

Only those who do not have to sell their houses to pay for care, jingl. Many of those with houses less than that do not have enough money to pay for care if they need it. All their money is in the value of the house, which at the moment will have to be sold to pay for their care.

durhamjen Sun 12-Apr-15 23:14:43

It's not to give money to them, Flickety; it's not to take money from their descendants when they die. Not quite the same.

Eloethan Sun 12-Apr-15 23:27:00

Bravo FlicketyB!

This will no doubt be welcomed by some of the people in the south east (particularly London) and wealthy areas of other parts of the country who will benefit.

A lot of people have misunderstood the position up until now and have thought their homes will be liable for IT. In fact, even before this increase in threshold, the Spectator reports that in 2013/14 only 5% of estates were liable for IT. And IT is only payable on the amount of money that exceeds the limit, not on the whole value.

Even for those who will benefit from this, how can they possibly think it right? Cameron justifies this move by saying that people have "worked hard" and "saved" to own properties of this value. The fact is, property prices in London and the south east have risen astronomically - not because their owners have worked much harder than anyone else in the country but just because of where they live.

And what an insult to suggest that those who haven't been able to afford to buy a home aren't equally as hardworking or thrifty as those who have. In my local paper this week is a job advert for full time support staff to work with "adults with complex needs and challenging behaviours" for the princely salary of £15,150 p.a. Where I live, you're lucky if you can get a small terraced house for less than £350,000 - and, relative to their size, flats are even more expensive. To rent a 1-bedroom flat costs at least £1,150 per month and a 3-bedroom terrace upwards of £1,600. How can it be right that couples owning a house worth up to £1 million are being protected in this way while those on low incomes are being penalised at every turn?

jinglbellsfrocks Sun 12-Apr-15 23:45:01

Well, let's hope they don't all squander their pension pots then jendurham.

GrannyTwice Mon 13-Apr-15 00:13:31

sorry - meant upto not over - I told you I didn't understand! And I still don't understand why the family home is being treated differently from other kinds of wealth. So basically, if you left a family home worth £1m, there would be no IHT to pay on that and then say you also left £200,000 in savings/ investments, the estate would pay £80,000 on that? But if you'd sold your house for £1m and so had £1.2 million in savings/ investments, the estate would pay 40% of £550,000 ie £220,000. Regardless of the whole rights and wrongs of IHT, this is just completely ridiculous isn't it?

mollie65 Mon 13-Apr-15 08:08:42

'The policy is to give money to those with houses valued up to £ 1 million. It will affect approximately 20 - 30,000 people a year the value of whose house exceeds the current joint Inheritance Tax allowance of £650,000. Those with properties worth more than£1 million will still pay Inheritance Tax'.

Djen - it is also not spelled out what happens to 'single' people whose beneficiaries are already much worse off as the IHT threshold is £325,000 - couples are massively advantaged (and not just in this area) and not everyone is single by choice.
so the single would have an IHT threshold of £325K + £125K - not a million then? shock
it is insane suggestion - the doubling of the IHT for couples was madness, the price of houses is madness, the rich get richer but we are all in this together is madness.
and don't for a second imagine that Labour would not come out with similar insane suggestions as they have proved in the past.

GrannyTwice Mon 13-Apr-15 08:31:40

The problem with our tax system is that it has just grown over the years in scope and complexity and that all that all governments ever do is really tinker round the edges. Occasionally something radical is introduced - like the 'poll tax' but basically it's a real mess that will just continue to be tinkered with

MamaCaz Mon 13-Apr-15 09:06:19

Just a thought:

As with every other recent policy proposal, this is being done in the name of the so-called "hard working" homeowners - or rather their offspring. Then when the inevitable happens, some of these offspring will be able to buy a property of their own outright with their inheritance.
I was wondering, as their homes will have been paid for by someone else's hard work, not their own, will they also automatically inherit the title of "hard working" homeowners?

jinglbellsfrocks Mon 13-Apr-15 09:34:07

This is the kind of topic that brings to light chips on shoulders.

GrannyTwice Mon 13-Apr-15 09:44:24

Jingle - speak for yourself. I haven't seen any 'chips' ( and how I hate that as a cop out in discussion). Flick for example has said she would benefit from the proposal and is still against it.

annsixty Mon 13-Apr-15 09:45:21

Well jbf I certainly have one on mine. When, and not if,my DH needs care, we shall certainly have to sell our house to pay for it,and he will only need it as a very last resort when I am no longer able to cope.

jinglbellsfrocks Mon 13-Apr-15 09:51:24

As I understand it there would be a £175,000 allowance per person for the family home, which, together with the £325,000 per person current allowance, would total an allowance of the one million. This would taper off for homes of higher value.

I think the family home is different from other assets - "an Englishman's home is his castle", and all that. I think this is a very English thing to do.

jinglbellsfrocks Mon 13-Apr-15 09:53:25

Excuse me grannytwice? Who is "copping out"? confused

One thing perhaps, to have the chip. Another thing to make it quite so obvious as one or two posts have done.

GrannyTwice Mon 13-Apr-15 10:15:17

Ann - you are being hard on yourself to call it a 'chip'. Thinking something is not fair is not having a chip - whatever that silly word means anyway. Lots of social change and progress came about because people fought to change things that disadvantaged them ( as well as others). Did Mrs Pankhurst have a chip because she wasn't allowed to vote?

mollie65 Mon 13-Apr-15 10:20:43

but j-whatever you do not seem to see how 'unfair' the proposal is
you would benefit so I assume your children when they inherit would benefit hugely
you have not addressed the so-called 'chip' I have on my singleton shoulder that couples already have massive benefits re any sort of tax - when i shuffle off my son would have to pay IHT as my modest home worth about 400k would be above the threshold - I did not choose to be a single person it was down to circumstances. Is my estate any less hard-earned than yours.