So the inheritance tax threshold was raised was it? That's what the BBC says, couples get a cut in inheritance tax after Darling "doubles" the threshold for married couples to £600,000 is the headline being pushed. But as Fraser Nelson has pointed out after talking to the City, he's done nothing of the sort.
The threshold remains at £300,000. All he has done is add two already existing individual allowances together and called it a doubling, but in fact, if you were worried about death duties and took advice yesterday you would have been told how you could achieve the same ends already. And let's be honest, if you're worried about IHT you're likely to be speaking to someone about it. So what's the point in Darling's announcement?
Even the Labour members at LabourHome have acknowledged that this is merely a structural rule change to dispense with the need for tax planning, rather than a raising of the threshold. One commenter went so far as to say that it was "pathetic" and that "reacting to the latest opinion polls is no way to run a Government!"
Meanwhile over at Comment is Free the usually loyal Larry Elliot said that the attempt to lift Tory policies fro George Osbourne - which is partly true on non-domiciles and air travel but not on Inheritance Tax - "smacked of short-term panic."
It seems pretty clear that Brown and his Government are now acting like rabbits in the headlights. A nightmare weekend, followed by borderline insanity in the press conference saying the polls had nothing to do with it, and then the next day they blatantly attempt to steal Tory policies but in actuality spin no change on inheritance tax as a doubling of the threshold!?
It's like the tyre has blown out on the motorway and instead of stopping to fix it they've just carried on driving.
15 comments:
Surely it would make more sense to abolish than to raise the threshold to £1 billion?
I hope that the government does what most cars experiencing a blowout do, veer all over the show for a distance and come to a halt in a massive wreck. Shall we say in about 18 months time?
Seeing as I know what he meant really lets deal with 1% thing. It's such a disingenuous figure, it is thrown out as if it must represent this very small super-rich clique and it smacks of envy politics.
1% actually represent over half a million people, many of whom are not super rich at all, but simply have a property they bought fifty years quite cheaply that by good luck has exploded in price. The fact is, the really super-rich make sure what they leave doesn't get stung anyway, and they represent far less of the country than the 1% that is being touted.
The deleted comment at the top said:
Well if what you say is true then the threshold for married couples is already effectively £600,000? So who exactly would the Tory proposal of raising it to £1Bn actually benefit? How many people would stand to gain from a £2Bn tax cut??? 1%? If that?
Obviously he meant a million and made a typo.
Bearing in mind that there is no IHT on the first death of a married couple , the exempt limit is already at £600,000 .
Crikey they ARE cheap and devious
and stupid too !
Dizzy,
What you say is not quite correct. I know of a relative who is over the lmit of £300K by some way, but these rules will allow her to have her husband's allowance too, even though he died some 40 yeas ago, so she now has some peace of mind that the treasury will not get their hands on her money.
As for the aircraft tax idea, it was lifted from the lib Dems, not the Tories. The Tories themselves copied it from the Lib Dems in the first place.
There are any number of people who would benefit from the Conservative proposal. A proposal which actually represents party belief, and not a desperate attempt to steal anything the public like.
As Dizzy says, the Labour proposal essentially makes a current legal formality an automatic process. That's about it. But it doesn't apply to anyone except married couples, so obviously the Conservative one would benefit more people. Plus, for a married couple, it would mean £2 million as opposed to £600,000. And of course it has the advantage of not being a hurried exercise in spin and deception...
I feel that the government will regret the way they have acted here.
I am into politics so I sometimes find it hard to appreciate how the vast majority of voters perceive things like this but there has not really been any attempt by the government to disguise the fact that they are blatantly stealing opposition policies only a week after they were announced. Well, to be accurate, they are not really stealing them as it is just making the arrangement that was already available automatic but they are obviously banking on the headlines being £600,000 or £700,000 by 2010 which will cover a lot more people's estates and hence from their perspective take the political pressure off.
There is a post on LabourHome which is lamenting the fact that the opposition are now clearly setting the agenda. I think ultimately the government will come to regret the moves they have made today.
It might seem to be clever politics but there is now a pattern of short-term "clever-clever" tactics being perpetrated with scant thought for the long term consequences and how awful this sort of behaviour seems to the electorate at large.
Also (my hobby horse) this whole episode highlights how the First Past the Post electoral system distorts the political debate and thinking. It was the polling from the marginal constituencies that caused Brown to abandon his plans for an election and where the Tory tax plans went down so well. However the few hundred thousand voters in marginal constituencies that effectively decide the outcome of elections are not representative of the whole population. They are disproportionately affected by these sort of policies. This means that in effect government policy is being decided by about 2% of the population, an example of another effect of our pernicious electoral system.
Don't quite buy your argument, Dizzy. I myself am all for abolishing inheritance tax, but to say Labour's policies make no difference is not the full story. There are many, many people with assets of £600,000 who would never consider estate planning, are just not of that mindset. And the fact that this change is back-dated makes it very different. Don't underestimate the number of people who don't do any estate planning, even when they could.
WHAT !!!!!.
Listen to yourselves. Diverting AGAIN, counter acting the message again...Poor auld Caulton must be working OT.
Hang on, so last week IHT was pegged at 300K and YOU were telling everyone that this was too low. Now you are saying that it was actually technically at £600K, which captures well over 90%+ of all inheritance.
MAKE YOUR SO CALLED MINDS UP. So are you saying that IHT was at 600K already so there was no real need to make it £1m.
SO ON THAT LOGIC....Tory fools, this means your proposal of £1m is actually £2m, so now you are actually giving a tax break to the very rich..
Id drop this line if I were you, it was a pretty poor attempt at COUNTER MEASURE MEDIA SPIN, but Id be very careful, Tax break to those with £2m.
More importantly, those who were getting IHT at 600K, were those with expensive fancy Tax lawyers, and were technically using a tax loop hole, I’d also be very careful of praising the ingenuity of those tax loopers, not good PR.
hahahah I think you mean Coulson, but I love this idea that I somehow
"Hang on, so last week IHT was pegged at 300K and YOU were telling everyone that this was too low. Now you are saying that it was actually technically at £600K, which captures well over 90%+ of all inheritance."
But I didn't say. I said that in the very specific case of couples there are ways avoiding inheritance tax to achieve the transferable allowance with planning.
MAKE YOUR SO CALLED MINDS UP. So are you saying that IHT was at 600K already so there was no real need to make it £1m.
As I just said IHT isn't at £600K, so there is nothing to make my mind up about. The threshold is £300K, and it remains £300K after yesterday's announcement.
SO ON THAT LOGIC....Tory fools, this means your proposal of £1m is actually £2m, so now you are actually giving a tax break to the very rich..
Actually it doesn't necessarily. Because the current situation is that you would leave a certain amount to your spouse and a certain amount to your kids. Spouses don;t pay IHT anyway so it's not an extra break at all. Clearly you don't understand how this actually works.
Id drop this line if I were you, it was a pretty poor attempt at COUNTER MEASURE MEDIA SPIN, but Id be very careful, Tax break to those with £2m.
It's not a line, it's my opinion. You ay think this is a "counter spin" operation but it's actually just my website and I have a full time job in the real world.
More importantly, those who were getting IHT at 600K, were those with expensive fancy Tax lawyers, and were technically using a tax loop hole, I’d also be very careful of praising the ingenuity of those tax loopers, not good PR.
What a load of bollocks. If my wife and I have joint assets of £600K, all we need to do is right our Wills to say that upon the death of one of us, £300K goes to our son and the other goes to whichever of us didn't pop our clogs. No expensive fancy tax lawyer required. Suggesting so is pathetically ignorant.
Each person has a £300,000 IHT nil rate band. you can structure your wills before or even after death so as to leave £600,000 IHT free to your dependents.
It is possible to use both Nil Rate bands (£600,000) even if your husband/wife/partner has died in the last 2 years using a deed of variation.
So it only benefits married/civil partnerships whose other half has died more than 2 years ago. It also stops the need to consult a solicitor to draw up these wills saving around £500.
IHT: not exactly no change, as I suggest here:
http://theylaughedatnoah.blogspot.com/2007/10/uk-inheritance-tax-threshold-unchanged.html
I normally loathe it when the PC brigade start screaming "discrimination!!!" at every available opportunity, but...
... isn't Labour's proposal a bit harsh (discriminatory, almost) on divorcées?
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