London, SW18 three bedroom Victorian terrace - £785,000.Home of the "rich" and part of 1% of estates that pay Inheritance Tax.
IHT bill if a couple? £74,000.
IHT bill if an elderly divorcee? £194,000.
London, SE18 three bedroom Victorian terrace - £190,000Home of the "hard working family".
IHT bill if a couple? £0.
ITH bill if an elderly divorcee? £0.
This is a message for all those Labour people that bang on about how only the "top 1%" pay IHT and as they're rich it's only fair. You know where you can stick that argument right?
Update: Apparently it might be the top 3%, but the point stands.
18 comments:
I thought Darling said 3% of estates.
Free money for dependent -
SW18 - £711,000 or £591,000
SE18 - £190,000
Just think the dependent of the divorcee in SW18 could sell that house, buy the one in SE18 and have enough to buy a nice house in France and have a few years off work to enjoy it. How terrible for them.
Dizzy: good point. And "the rich" will have had the right legal and financial advice anyway. The Duke of Westminster's estate doesn't seem to have reduced much.
Oh how very smart but what a shame you've missed the point. Firstly I read it was 1% but it doesn't really matter anyway in terms of the figures. The point being made remains the same. The person living in the first house is considered by people like you, to be "rich", when in fact, the chances are they're nothing of the sort.
Flipping it on it head and calling it "free money" is also weak because you're assuming that just one person is too receive the entire estate, which is not unheard of, but isn't that common. So it's probably not half a million quid free to buy a house elsewhere and a place in France at all. You see, reality, gets in the way of your ideology about what is defined as "rich" and "fair".
Much in the same way as reality of, for example, a parent wanting to make sure their children have the best possible chances, is punished and made fruitless by your politics of envy that are out-dated. And let's just remeber something here, this is not about giving the "rich" a break, the people who inherit an estate like the one above in SW18 are unlikely to be "rich".
Do come back and try again, but perhaps leave the pseudo-scientific historical materialism at the door?
Sackerson - you are spot on on the money with that one. The real rich pay bugger all anyway. It's the people that the Left like to see as the rich because they ignore practical reality in favour of their philosophical flawed ideology who get genuinely hurt, and they are not rich.
Re anonymous - that comment could be titled "Envy Politics - In Words"
Where does this 1%/3% thing come from anyway. More than 3% of the UK population must have more than 600,000 in assets. My mum does and she has never been "rich" just incredibly lucky with the property market. There is no way she is in the top 3% by wealth.
This 1% or 3% is total garbage. That figure is based upon estates now that are going thorugh probate. It does not take into account the likely estate now.
For example if me and my wife were to die (unlikely as we are in our 30s) House valued at £300,000, take off mortgage of £150,000, add on life cover for mortgage of £150,000 add on death in service benefits of £120,000 each, add on savings of £50,000, add on pension funds of £100,000, add on contents, cars etc. £40,000 and what have you got £730,000. Now our wills are structured to use both nil rate bands using an IOU to a trust (cost £450 at a solicitor) so if I die my wife gets everything and when she dies £300,000 (My nil rate band) goes to my trust and to the kids and her £300,000 goes to the kids leaving £130,000 taxable at 40%.
Am I super rich - nope. do Labour's figures add up - nope. Are labour spinning - nope, I have come to the conclusion that they are actually incompetent.
Ed and anon, agree with you entirely. The one, three or whatever % line is disingenuous nonsense.
Anon - shit, I hadn't even considered all those benefits I get if I die, like critical illness/death cover, death in service etc.
Dizzy
nobody considers these benefits because most people die after retiring and these benefits have ended. Typically in retirement people's income has been provided by pensions which are not inheritable. All of my clients (I'm an IFA) provide for income in retirement through investment plans that it is possible to leave as an inheritance so passing the wealth on through the generations. So most of my clients will have investments in retirement of around £300,000 rather than a pension fund of around £300,000. When they die the £300,000 investments can be left to the kids rather than the pension pot which cannot. And the government wonders why people don't pay into a pension anymore
I think the extra £600k is well worth it for the top house. Street lighting, no horrible cars parked in front of it and a nice tree.
I'll have that one please.
Am I a bit thick? I just don't understand the argument here. Two more or less identical houses, one, due to location, worth a lot more than the other. The expensive one brings a tax liability, the cheaper one doesn't, and somehow this is "the politics of envy".
I don't see why, if a person gets a large windfall, they shouldn't have to pay tax on it, just like they do on income that has been really earned by working. (Perhaps the secret is not to tax estates, but to tax incoming bequests as income.) In any case wealth accruing from property hasn't been earned in any meaningful sense. So taxing it seems quite sensible, as it is no disincentive to constructive economic activity. The anti-IHT campaign ought to rename itself "Free Houses for the Middle-Class and Middle-Aged".
The point being made here is that in these two case these houses could easily be a family home to someone for half a century. In the case of the expensive one it will liekly have to be sold by the family in order for them "inherit" it, whilst the latter will just have the keys handed over.
There is a disparity in IHT based on arbitrary figures which fail to adequately take into account the practical reality of estates. The expensive house may appear to be a "windfall" but if the entire family lives in that area then actually it;s not a windfall of cash if that person wants to live in the house.
It's not about middle class people either, and in fact raising class is exactly the sort of envy politics that is the problem. IHT essentially tells people, don;t bother aspiring to help your kids, the Government will look after them.
None of this explains why Tories - who've spent decades masking their defence of privilege in a cloak of 'meritocracy' - think that it's a good thing that people can inherit vast amounts of money without working for it themselves.
Does this country's success depend upon the hard work and creativity of it's citizens? If so, why is everyone so keen to reward people because they were lucky enough to land in the right womb?
This is not about rewarding people because they were born in the right womb. It's about people, most often parents, working their socks off to give their kids the best that they can. IHT was invented to tackle the privilege of the aristocracy, not the family of four who work their arse off. I doubt any parent thinks otherwise and the ones that claim they do are liars... you only have to look at the inheritance tax avoidance of senior related Cabinet minister to know that that is the case.
Hmmmm. Still not convinced, though it's a good debate. You talk about parents working their socks off to give their kids the best that they can, and that's all very laudable. I did that for twenty years, and gave them all the support, educational and otherwise, that I could. That was my job as a parent, not to try to give them a stonking great windfall when they are (hopefully) middle-aged. Mine are in their late teens (in the case of the one who's 20 tomorrow, their very late teens) and I've spent several years trying to get the message through to them that money doesn't grow on trees, and trying to ease their hands out of my wallet. I certainly don't want them spending their middle years waiting for the windfall when the old man croaks. (As it is I've taken early retirement, so they know darn well it won't be worth poisoning my coffee.) IHT doesn't say "don't bother aspiring to help your kids, the Government will look after them", it says "give them the best education and then turn them loose - when they're 30 or 40 or 50 they should damn well be able to look after themselves". Oddly, a number of seriously rich people seem to agree with me.
Cip: the point is motivation. Some people are motivated to work hard, and whilst this is good for them and their family, it is also astonishingly good for the economy and the treasury. (ANd these, in spite of leftist thinak are NOT the same thing).
The point is that IHT is just one more demotivating aspect, like excessive regulation and high marginal rates of tax, acting against the hard working. Why "punish" the hard working or sucessful. They will have paid high rates of tax on most of the wealth they accumulated. Except house price gain, a lot of which is merely inflation. Will you givce a tax deduction to folk whose homes have gone down in value...?
Another thing to note is that life expectancy is about 79 on average.
So Dizzy, "It's about people, most often parents, working their socks off to give their kids the best that they can. "
The kids are going to be in their 50's or 60's. It is not about the first step on the property ladder.
notionally replace kids with grandkids.
The kids are going to be in their 50's or 60's. It is not about the first step on the property ladder.
The rate we're going it will be
Post a Comment