Even Less Reason For The Wrinklies To Sell Up

[mattyboy1973]

Tories’ £1m inheritance tax giveaway aimed at wealthier households

So it looks like Osborne's vote-winning proposal on inheritance tax is going to specifically exempt the family home, and not be an across the board increase in the threshold. Could there be a less fair way of targeting this? Exempting unearned (and previously untaxed) gains whilst maintaining the tax on earned (and previously taxed) assets?

The biggest consequence of this that I can see - unintended or otherwise - is that it is going to be a strong disincentive to oldies selling up to downsize, and incentivising older people to downsize and free up housing space is something we should really be trying to encourage. I speak as someone whose dad lives alone in a 5 bed house, so I know how stubborn people can be about moving out - what we don't need is an extra, solid financial reason to stay put.

Garbage.

[Si1]

+1

[Democorruptcy]

Tories’ £1m inheritance tax giveaway aimed at wealthier households

So it looks like Osborne's vote-winning proposal on inheritance tax is going to specifically exempt the family home, and not be an across the board increase in the threshold. Could there be a less fair way of targeting this? Exempting unearned (and previously untaxed) gains whilst maintaining the tax on earned (and previously taxed) assets?

The biggest consequence of this that I can see - unintended or otherwise - is that it is going to be a strong disincentive to oldies selling up to downsize, and incentivising older people to downsize and free up housing space is something we should really be trying to encourage. I speak as someone whose dad lives alone in a 5 bed house, so I know how stubborn people can be about moving out - what we don't need is an extra, solid financial reason to stay put.

Garbage.

Isn't the biggest consequence that if people put their money into property it won't be taxed but have it in anything else and it will?

You WILL buy a house.

[olliegog]

this is insane

the doubling of inheritance tax threshold for couples was insane

the passing of up to a million tax free to offspring (what if the will cut out the direct descendents what would happen then) is insane

the effect on charities who are passed the inheritance free of tax currently is insane

only the bit above the threshold is taxed at 40% so not a lot of money

who is this winning votes off

not the elderly who may be shunted off to a dingy care home so the kids can have the house in it's entirety

not the single elderly who will not get the full whack

not those who do not have wealthy DPs

I could go on but it's getting tedious now.

[mattyboy1973]

Isn't the biggest consequence that if people put their money into property it won't be taxed but have it in anything else and it will?

You WILL buy a house.

Yes - but immediately, the biggest consequence is likely to be that people don't sell their houses, as this is going to affect older people first. If it becomes entrenched, then yes it will be yet another general incentive to buy a house and not save - although the IT threshold is already pretty generous IMO so you'd have to save a lot to be worried about it.

A more radical solution would be to increase (or maintain - its high enough already) the threshold on everything except the family home, given that most of the money in the family home has almost never been "earned" or taxed. Family home is then taxed at the current 40% for full value which would give pensioners a good reason to down size (i.e. keep their tax free winnings). Can't see that one flying though!

[olliegog]

what if the wealth is tied up in other assets - how will that work

what is so magic about property (does it only apply to principal residence or all properties?)

[rantnrave]

Isn't the biggest consequence that if people put their money into property it won't be taxed but have it in anything else and it will?

You WILL buy a house.

I've observed this in my own personal circumstances for a while now. With almost enough funds to buy in cash, I still manage to only earn a whopping £200 a month in interest - which with my wife looking after the nipper we've put in her name otherwise it would be taxed. Savings rates are cr*p so mortgage rates can be lowered, so why not borrow the remaining amount I need and BUY A HOUSE. Job security is always a concern and with those funds in the bank I wont qualify for any benefits if I lose my job. However, that would all change if I just used the cash to BUY A HOUSE. We would likely qualify for more tax credits too if only we would BUY A HOUSE...

[gf3]

Personally I would rather pay a lot less tax while I am alive and pay a lot more tax when I am dead.

The only good thing you can say about the Tory's is they were better than Labour. It sticks in my throat that under a Labour the tax code was £6,500 and under the Tory's it's now £10,600. I thought I had been voting for a left wing party.

[spyguy]

The UK has a truelly amazing economy.

So many benefits, so little tax income.

A more stupid person than me would think we are running very large deficit that'll bite us in the ass in a short while.

[Eddie_George]

Personally I would rather pay a lot less tax while I am alive and pay a lot more tax when I am dead.

The only good thing you can say about the Tory's is they were better than Labour. It sticks in my throat that under a Labour the tax code was £6,500 and under the Tory's it's now £10,600. I thought I had been voting for a left wing party.

To be fair, I think this is the Lib Dem's influence. Not sure the Nasty Party would've done this if they'd governed alone.

[crashmonitor]

I mentioned this on another thread yesterday. My conclusion was that more expensive houses would further decouple from the price of average to cheaper houses. Only have to look at farmland to see that if you make something IHT free valuations become crazy...ie 20k an acre, yield zero (almost a liability).

This idea is beyond stupid. Large houses under utilised and downsizing ended to get max. relief.

Crash in agricultural land would follow, I guess that it is the only good that would come out of it.

Edited March 17, 2015 by crashmonitor

[TheCountOfNowhere]

One good reason to sell up:

[byron78]

Personally I would rather pay a lot less tax while I am alive and pay a lot more tax when I am dead.

The only good thing you can say about the Tory's is they were better than Labour. It sticks in my throat that under a Labour the tax code was £6,500 and under the Tory's it's now £10,600. I thought I had been voting for a left wing party.

That was actually Lib Dem policy.

Certainly wouldn't have happened but for the coalition.

Osborne does seem to be running with it.

Although I expect him to raise NI contributions post GE (if he gets back in), so most of what the poorest workers "save" will be clawed back.

And given to rich old people. Probably.

[R K]

what if the wealth is tied up in other assets - how will that work

what is so magic about property (does it only apply to principal residence or all properties?)

it sits on land. £1m props mostly sit on land in SE owned by Crown, Duke of Westminster & other assorted Tory lords.

Keeps land capital concentrated in SE/Tory hands.

[gf3]

To be fair, I think this is the Lib Dem's influence. Not sure the Nasty Party would've done this if they'd governed alone.

Yes I was being lazy saying the Tory's. Lib Dem were behind the pension reform too. Two of the best policy changes I have seen in my life time. Funny how they have the word Dem democracy in their name and yet they don't want a vote on europe.

This must be a strange meaning of the word democracy where you are only aloud to vote for things they want.

[R K]

The UK has a truelly amazing economy.

So many benefits, so little tax income.

A more stupid person than me would think we are running very large deficit that'll bite us in the ass in a short while.

Raises incentive for the fictitious argument to cut more from public spending.

[canbuywontbuy]

I speak as someone whose dad lives alone in a 5 bed house

My dad lives alone too, as do about 60%-70% of his neighbours, with a few elderly couples and just one family on the entire cul-de-sac of about 25 houses. All detached 3 to 5 bed properties.

[Timak]

My dad lives alone too, as do about 60%-70% of his neighbours, with a few elderly couples and just one family on the entire cul-de-sac of about 25 houses. All detached 3 to 5 bed properties.

I'd say 90% of my parent's friends are still in their family homes. They only ones who have downsized are those who moved to be nearer grandchildren or who didn't have decent pensions.

And I can see why, they don't need to free up the cash and they like the living space and gardens. They aren't going to move to some new build with tiny rooms, no parking and a scrap of grass out back overlooked by 10 other houses. Even the retirement villages they looked at charge £400k for houses less than half the size of their current home.

[Dorkins]

So if I am old and have say a £200k flat and £800k in cash (plus pension to live off) to minimise inheritance tax I need to trade up to a £1m house.

Imagine lying there on your deathbed, surrounded by a dozen estate agents trying to flog you a house.

[crashmonitor]

So if I am old and have say a £200k flat and £800k in cash (plus pension to live off) to minimise inheritance tax I need to trade up to a £1m house.

It's already too generous.....surely that's one million - 650k (for the deceased spouse) - 200k for the house. a mere 150k trade up should secure the kid's future tax free and make sure those without rich parents live their lives in internal damnation.

More policies to ensure Victorian style birth lottery all good for some I suppose. Guess Milibot and Cameron, having been blessed, will not see a problem.

Edited March 17, 2015 by crashmonitor

[Dorkins]

Well there might be a lot of £1.5 million houses reduced to £1 million suddenly.

Why? IHT is only collected on the value over the threshold.

[crashmonitor]

Why? IHT is only collected on the value over the threshold.

Indeed, with the main home plus the 650k threshold, not going to be a lot of retribution on death for the fact they leave a two trillion debt for their followers.

Still I guess the workers without rich mummies and daddies can bloody well pay for the forty odd years of retiremnt some of these deceased with huge estates have enjoyed courtesy of the National debt and tax payer.

Edited March 17, 2015 by crashmonitor

[Executive Sadman]

Personally I would rather pay a lot less tax while I am alive and pay a lot more tax when I am dead.

The only good thing you can say about the Tory's is they were better than Labour. It sticks in my throat that under a Labour the tax code was £6,500 and under the Tory's it's now £10,600. I thought I had been voting for a left wing party.

At some point labour decided it would stop being the party of the working class and start being the party of the (non-working) underclass.

Maybe a wise decision given the off-shoring of working class jobs, but nonetheless there is a perception that labour would rather encourage benefit dependency than job creation.

[Agentimmo]

At some point labour decided it would stop being the party of the working class and start being the party of the (non-working) underclass.

Maybe a wise decision given the off-shoring of working class jobs, but nonetheless there is a perception that labour would rather encourage benefit dependency than job creation.

Quite.

Will be interesting to see what happens if they are wiped out by the SNP in the May election and lose in England as well.

Maybe an admission that the working class have deserted and ain't coming back? Hopefully the end of the Nu-Labour experiment.

If not, Scotland will continue to snub Labour, depriving them of their 50+ seats.

[Democorruptcy]

So if I am old and have say a £200k flat and £800k in cash (plus pension to live off) to minimise inheritance tax I need to trade up to a £1m house.

One unintended consequence is that it could make BTL less attractive. An older person with a house and a couple of BTLs might as well sell that lot and buy a larger house so there is no IHT to pay.