Apparently IHT on may not be too bad?

BikingBud

Hoenir said:

SouthCoastBoy said:

Hoenir said:

MarkCarnage said:

QrizB said:

Universidad said:

BikingBud said:

Tell me again how house price inflation was good for us all!

It used to be good when you bought a house at the limit of affordability and over time inflation and wage increases made it a lower and lower proportion. Since salaries stopped keeping up with inflation, its made mortgages for the current generation much more expensive in real terms over time.

I'd rather like to see house prices fall by 50%, despite the fact it would reduce my paper assets by several £100k. But that would be quite the bursting bubble.

Best thing that could happen for this country (and some others) is significant real fall in house prices allowing money to go to more productive areas of the economy. 

Totally agree. We appear to be living in an illusory world. Where money is made , and subsequently spent,  by simply purchasing an "asset" . Watching it inflate in price then selling it on to somebody else who funds this with an ever increasing level of debt. While the number of people actually working productively diminish in number.  

I'm quite happy to jump on this band wagon and see house prices significantly reduce in real terms, however been wanting that to happen for over 20 years, can't see it ever happening as the economy is based on rising house prices.

Always remember debating with friends the crazy rapid rise of property prices in the late 90's. We could never figure out what had changed. When Northern Rock finally collapsed in 2008 became possible to build an understanding of what the main drivers had been. Though no correction subsequently followed. As interest rates rapidly fell to rock bottom levels. In effect deferring the day of reckoning. 

Find it interesting that mortgage borrowing rates are considered high now. Yet are well below those in 2007 (prior to the (GFC).  

And that day of reckoning is still being deferred.

House prices are a thermoset, like bakelite, once they are cooked it is very difficult for them to be unwound, despite most people eventually realising the long term folly.

QrizB

Hoenir said:

Find it interesting that mortgage borrowing rates are considered high now. Yet are well below those in 2007 (prior to the (GFC).  

Agreed. I took a ten-year fix in 2006 at 4.89% (and considered it a steal; me previous fix had been 7.something). I've just checked moneyfacts and I see I could get a ten-year fix today at 4.59%.
We're not even back to where we were, yet!

Albermarle

AlanP_2 said:

Universidad said:

incus432 said:

 the inclusion of pensions in IHT is a serious issue... affect those with property whose pensions and other assets put them over the 1 million mark.

That's about a quarter of all pensioners.

BikingBud said:

Tell me again how house price inflation was good for us all!

Do you have a source for that statistic as it sounds extremely high to me?

Out of 7 pensioner couples I am familiar with I can think of only one couple whose assets would get to that level and the main factor there  is a large house 2 miles outside the M25 in Hertfordshire.

I can not remember the exact source, but I read that 4% of households currently pay IHT.
Even before the change in pension IHT this was set to rise slowly to 7% due to the limit being frozen, increasing house prices etc .
The pension change would bring this figure closer to 10% eventually.

MarkCarnage

The number £59,000 quoted in the article as income required in retirement comes from here.

https://www.retirementlivingstandards.org.uk/

It's been running for quite a while. Note that the £59k is for a couple in 'comfortable' retirement, and is expenditure not income. It's based on notional spending patterns. 2 full state pensions would provide about 1/3 of that in themselves. Which would leave just under £40k from other sources (which might be spending from capital as well as income). 

I don't think it's scaremongering....just an estimate. The 'moderate' lifestyle version is not far over £40k. 

DT2001

Hoenir said:

SouthCoastBoy said:h

Hoenir said:

MarkCarnage said:

QrizB said:

Universidad said:

BikingBud said:

Tell me again how house price inflation was good for us all!

It used to be good when you bought a house at the limit of affordability and over time inflation and wage increases made it a lower and lower proportion. Since salaries stopped keeping up with inflation, its made mortgages for the current generation much more expensive in real terms over time.

I'd rather like to see house prices fall by 50%, despite the fact it would reduce my paper assets by several £100k. But that would be quite the bursting bubble.

Best thing that could happen for this country (and some others) is significant real fall in house prices allowing money to go to more productive areas of the economy. 

Totally agree. We appear to be living in an illusory world. Where money is made , and subsequently spent,  by simply purchasing an "asset" . Watching it inflate in price then selling it on to somebody else who funds this with an ever increasing level of debt. While the number of people actually working productively diminish in number.  

I'm quite happy to jump on this band wagon and see house prices significantly reduce in real terms, however been wanting that to happen for over 20 years, can't see it ever happening as the economy is based on rising house prices.

Always remember debating with friends the crazy rapid rise of property prices in the late 90's. We could never figure out what had changed. When Northern Rock finally collapsed in 2008 became possible to build an understanding of what the main drivers had been. Though no correction subsequently followed. As interest rates rapidly fell to rock bottom levels. In effect deferring the day of reckoning. 

Find it interesting that mortgage borrowing rates are considered high now. Yet are well below those in 2007 (prior to the (GFC).  

I lived through the post MIRAS crash in the late 80’s where prices in the south east fell by about a 1/3rd and caused a problem with negative equity for many. Whilst I would be quite happy for a drop in real terms ideally it needs to be a gradual process (which I think is unrealistic).

zagfles

MarkCarnage said:

The number £59,000 quoted in the article as income required in retirement comes from here.

https://www.retirementlivingstandards.org.uk/

It's been running for quite a while. Note that the £59k is for a couple in 'comfortable' retirement, and is expenditure not income. It's based on notional spending patterns. 2 full state pensions would provide about 1/3 of that in themselves. Which would leave just under £40k from other sources (which might be spending from capital as well as income). 

I don't think it's scaremongering....just an estimate. The 'moderate' lifestyle version is not far over £40k. 

Been discussed to death here several times, here's one of the many threads and contains links to others: Cloud Cuckoo Land — MoneySavingExpert Forum 

Cobbler_tone

I guess it is all relative. If you are going to spend £500 once a month to see a West End show (easily done if not scrimping with good seats), go to Oz, the US and/or a fancy cruise a couple of times a year, maybe in first class. Get a £40k car every 3/4 years, eat out regularly, shop in Waitrose, have BUPA cover and pet plans, maybe life insurance and funeral cover etc….you are going to need a decent income….or shop in Aldi’s and sit in the upper circle matinee and have a £15k car every 5 years, without needing £60k a year.

It’s all just maths.

german_keeper

And of course it's about definition of terms. None of these terms are measurable and definitive; one man's comfortable will be another man's moderate.

DT2001

ali_bear said:

There is such a thing as fiscal policy. By ending the IHT exemption for pensions it means that those with excess money in later life will start thinking about passing some of that on to the next generation earlier, instead of hoarding it away to pass down the generations unused. It brings that money back into the real economy where it can possibly benefit real living people. 

Obviously if you're a farmer then even paying half the IHT everyone else pays is the end of the world. 

I understand that many farms are only passed on following death but wonder why that is the case? If the life expectancy of farmers is similar to the general population (say early 80’s) then why not pass on the farm at SPA or the inheritors could be in their late 50’s early 60’s. Many family businesses are passed on when the children are younger. Can anyone enlighten me why this is not the case with farmers.

michaels

MarkCarnage said:

The number £59,000 quoted in the article as income required in retirement comes from here.

https://www.retirementlivingstandards.org.uk/

It's been running for quite a while. Note that the £59k is for a couple in 'comfortable' retirement, and is expenditure not income. It's based on notional spending patterns. 2 full state pensions would provide about 1/3 of that in themselves. Which would leave just under £40k from other sources (which might be spending from capital as well as income). 

I don't think it's scaremongering....just an estimate. The 'moderate' lifestyle version is not far over £40k. 

There were two big objections

one is that in a period when inflation was about 10% the required incomes increased by about 25% between iterations of the report
the other is that it seems to be connected to a pension industry that has a vested interest in suggesting the maximum possible pension savings