Withholding judgement

[andrewducker]

I'm waiting to see what the Lib Dems and Conservatives have agreed.

If they have managed to get the bottom end of Income Tax raised to £10,000 through, prevented the rise in Inheritance Tax exemptions, and stopped the ridiculous marriage giveaway then that's a good start. If they can get a referendum on voting reform in, then I'll actually be happy.

The Lib Dems were never going to get a majority. And that means working with one of the other parties in order to get some of what they wanted. Labour were refusing to negotiate (last rumour I heard was that ID cards were a major sticking point), so if they can get what they want out of the Tories then I'm right behind them.

The Tories cannot pass _anything_ without Lib-Dem backing. I'm hoping that this takes the worst edges off of them. If it doesn't - if they just back the Tories irrespectively and don't get electoral reform, then they deserve to go down in flames.

Now to wait for the details...

(Some stuff here, and Robert Peston's take here)

Comments

[bohemiancoast.livejournal.com]

Huh; why on earth should people get large untaxed inheritances just because their parents were prudent or happened to live in Chelsea?

But the reason for increasing inheritance tax thresholds is more pragmatic -- this is a tax that overwhelmingly falls on stupid and/or unlucky people. Anyone with any degree of organisation in their personal finances sets it up so that no inheritance tax is paid. With the result that the *only* people this tax hits are outrageous hard cases; it collects zero money from the truly rich.

[anef.livejournal.com]

I don't think it's true that only disorganised people pay inheritance tax. However it is true that rich people have wealth that is much easier to pass on to to future generations. If your assets comprise a house that you need to live in, and some savings that you need to live off, your chances of being able to pass those on tax free are very low.

[ayia.livejournal.com]

There are loopholes regarding income tax but Im not convinced there are ways around the paying inheritance tax. I may be wrong tho regarding the truly rich - I haven't investigated it. From a personal example my mother and her 2 brothers had to pay inheritance tax on the sale of their parents Edinburgh home; giving them no option but to sell it. Might I add they had to pay the tax BEFORE they had even sold the place or got any money from the estate...

[zz]

because if the inheritance is mostly or all a house, you can't pay some of a house, you have to sell it. houses are so difficult to buy these days, and can have sentimental meaning unlike cash, forcing people to part with them seems unfair.

[andrewducker]

Doesn't seem unfair to me. It wasn't their house.

[zz]

I don't see how that's relevant. If you grow up in a house, you don't own it but may still form an attachment to it and the memories that happened there. And given house price salary ratios these days, inheritance may be the only way a lot of people will ever own a house without uprooting to a different (cheap) part of the country.

[andrewducker]

Having an emotional attachment to something does not entitle you to it. You didn't pay for it, someone else did.

And yes, it's hard to afford to buy houses - which is a good reason to tax people who have more money and redistribute it to people who have less - which is what inheritance tax contributes towards.

[zz]

Being given something entitles you to it. You don't own something more because you suffered for it. You own it or you don't.
Also, if gifts are not income taxed, why should inheritance be different? I don't really understand that.

If the inheritor already owned a house, then fair enough, they don't need another one and can pay tax on it.

it's hard to afford to buy houses - which is a good reason to tax people who have more money and redistribute it to people who have less

part 2 doesn't fix part 1.
i suppose i don't consider a first house as "money". it's an investment, yes, but it's a special case. with one you have somewhere secure to live, without it you're either homeless or at the whim of a landlord. i have no problems with cash, shares/etc, chattels being taxable. and because of rising house values, inheritance tax is and will continue to encompass more people, it's not just keeping the super rich in check.

[andrewducker]

Also, if gifts are not income taxed, why should inheritance be different? I don't really understand that.

Gifts are taxed - if the person dies within 7 years of giving it to you.

The idea behind inheritance tax is to prevent some people (those with parents worth more than £325,000) from automatically doing far better than others. That's still significantly more than the average house price in the UK, and the tax only kicks in at that level, so if the home is worth £350,000 then the tax only applies on the last bit of it.

It currently hits the richest 6% of the population - and that levels seems absolutely fine to me.