Conservatives in disarray over 'sooner or later' tax promise

Rochdale_Pioneers

From what I am hearing this morning the Tories are genuinely stuck on this one.

On one side you have their natural fan base who want tax cuts and feel its their right after 3 terms of Labour.

On the other hand you have the realists who point out that public finances won't allow fr cuts, and that slashing IHT for the wealthy few who have to pay it doesn't sit at all well with their attempt not to look like the friends of the rich again.

If they don't drop the proposal it'll be used to bludgeon themr round the head repeatedly - spin it how you like when only the top 7% ever pay it a tax cut can only be seen as one for their rich mates. If they do drop it their supporters will bay for blood and remind everyone exactly what voting Conservative actually means.

And it seemed like such a clever idea at the time....

ukcarper

I thought the idea of increasing in tax threshold was to take average families out of inheritance tax because their family homes were over the threshold so with house prices falling most people’s house will be under the threshold anyway. Also a lot of the tax was on money made by house price inflation which hadn’t been tax before.

Rochdale_Pioneers

ukcarper wrote: »

I thought the idea of increasing in tax threshold was to take average families out of inheritance tax because their family homes were over the threshold so with house prices falling most people’s house will be under the threshold anyway. Also a lot of the tax was on money made by house price inflation which hadn’t been tax before.

That was the spin. If you took the value of a family home there and then and assumed that the parents both died the day after in a freak yachting accident then yes, average families were in line to pay IHT.

In reality almost all estates have been greatly reduced by the time they are passed to children - large family homes get downsized or sold to pay for care, the parents spend the cash travelling round the world - and the threshhold for payment will have increased in that period as well. Factually its only the very richest estates that pay IHT or had any prospect of paying IHT. Its a tax cut for the wealthy paid for by the aspiring middle class who in reality have next to sod all chance of ever benefiting.

lostinrates

Rochdale_Pioneers wrote: »

Factually its only the very richest estates that pay IHT or had any prospect of paying IHT. Its a tax cut for the wealthy paid for by the aspiring middle class who in reality have next to sod all chance of ever benefiting.

??My grandparents estate was subject to inheritance tax, a nurse and a policemen, very ordinary people, albeit good savers and homeowners...

ah, yes, rereading your post, the retirement bungalow they lived in was sold when the first dies, and a sheltered housing place was bought, then the surviving grandparent went into private care, but after all that was paid for inheritance tax applied to the cash left at the end.

Sir_Humphrey

dealsearcher wrote: »

4. You pay tax when you die on what's left after being 'prudent' all your life

How many times does the government need to tax us?

You can't take it with you. If everyone agreed to kill themselves at 30, a la Logan's Run, then taxes could be a fraction of their current level.

drc

Why don't they just reduce public spending and stop wasting money on social engineering rather than taxing the working middle classes into oblivion

Sir_Humphrey

drc wrote: »

Why don't they just reduce public spending and stop wasting money on social engineering rather than taxing the working middle classes into oblivion

This is a tax cut for the rich. What planet do you live on where £300k to £1 million is not a lot of money at death? The only middle class people who would benefit from the IHT chance are those who got VERY lucky with the housing market. For the recipient, it is simply unearned wealth.

A._Badger

Sir_Humphrey wrote: »

This is a tax cut for the rich. What planet do you live on where £300k to £1 million is not a lot of money at death?

It's not difficult to accumulate £300, 000's worth of property in the South East. Many have achieved it despite living in a degree of relative poverty.

There are two reasons for inheritance tax: base envy and the familiar empty promises that the misappropriated money will be used to make society a 'better place'.

Few politicians will admit to the former. None have proved capable of delivering the latter.

chewmylegoff

the collapse of the housing market make the inheritance tax thing less of an issue in my eyes. in any case, it can hardly be a great priority at present.

i reckon the tories have shot themselves in the foot here, i bet darling is crossing out this plagiarised policy from his 2009 budget speech as i type.

i would prefer to see the recipient taxed, rather than the estate. but i suppose this would just result in all recipients being blind trusts located offshore, so you'd need a withholding tax to compensate and you'd be back to square one.

Sir_Humphrey

A._Badger wrote: »

It's not difficult to accumulate £300, 000's worth of property in the South East. Many have achieved it despite living in a degree of relative poverty.

There are two reasons for inheritance tax: base envy and the familiar empty promises that the misappropriated money will be used to make society a 'better place'.

Few politicians will admit to the former. None have proved capable of delivering the latter.

Nonsense. If Henry and Jocasta get a load of money off Mater and Pater, then other people find it more difficult to get on in life. It is much easier to make a million, if you already have a million. The end result over the years is that it becomes much more difficult for people to better themselves, as wealth gets concentrated into fewer families. People who believe in meritocracy should be opposed to cutting IHT.

Even in London, most people will have a net worth well below £300k, and yet more will join them in the next year.