Inheritance Tax has rumbled on in the news at about the same level of interest (or lack of) for a long time now - at least six or seven years. The Conservatives, via George Osborne, have brought it back on to the radar via a proposal to increase the threshold where IHT kicks in from £350,000 to £1,000,000.
Now, as an aside, even with the boom in house prices, I'm not convinced that IHT is going to hit that many estates. Firstly, IHT planning is becoming more mainstream. Secondly, a lot of people have borrowed against their houses. If someone borrows £300k against their £500k house as part of an equity release scheme to create some spending money for retirement, then they've slipped the IHT net.
And in any case there are some good things about IHT. Principally, it's unlikely to cause hardship to anyone. The person who accumulated the money and needed it to provide for themselves in retirement rarely objects, principally because he or she is dead. If the children were hoping to inherit £1,000,000 but only inherit £740,000, then they should be pretty happy, in the view of many people.
So, I can't get too excited about IHT. The tax revenue (well, some quantity of tax revenue anyway) has got to come from somewhere. If the money isn't collected from those estates, it will have to be collected from someone else. The Conservative party are proposing to collect it from "Non-Doms" - wealthy people who live in the UK but claim that they ultimately belong somewhere else and avoid paying tax on their non-UK income, unlike me and (probably) you, who must pay UK tax on our worldwide income. Now, I would have to say that this probably isn't fair.
However, there's no need for those two issues to be associated at all - although all the newspaper articles in the aftermath of the Conservative proposal appear to be doing so. They are entirely separate. I suspect that most people probably aren't too bothered by Inheritance Tax, but think that the minimal tax paid by the non-doms is unfair. Well, 95% of people have no interest in either subject, but for the 5% of us that have some passing interest I'd speculate that may be the position. Hopefully the two issues will be uncoupled and can be debated separately in the future.
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