Wednesday, January 26, 2005

Rullsenberg Rants: Inheritance Tax in the UK

Mr Cloud has some interesting points to make today on the issue of Inheritance Tax in the UK, given the inflated prices of property currently affecting the market value of homes.

Two points:
(1) Quarter of a million is a lot of value by anybody's standards, but in the context of the West versus much of the rest of the globe, this is an obscene amount of money. I would also add that for many in the UK it is an obscene amount of money. Making IHT a cornerstone of any financial campaign to improve the wealth of this nation does indeed therefore come across as specious.

(2) I do, however, have some sympathy with those who inherit property where someone, either wholly or as one of a number of siblings, is currently residing in the property.

In some parts of the country - due to the ridiculously inflated market, and not least due to the impact of property sell-offs by Councils in the past - there are properties of relatively modest proportions which are currently adjudged to be worth over a quarter of a million.

Additionally, a property is only worth what someone is prepared to pay for it - not the same thing as its adjudged market value, and for a variety of reasons the property may not be able to be sold (unfit; requires substantial work to make it 'saleable' etc).

The recent legislation to protect gay partnership in the same way as a heterosexual married couple (or an unmarried one with a specific statement in their will) is admirable, but what happens when siblings disagree about when/how they receive their 'cut'? What happens when someone has been living as a carer and the property is their home: their ONLY home? What if the market precludes them selling up to move to another property - smaller, cheaper - even if they wanted or were able to?

Of course, my parents lived in council rented accommodation all their lives and it would never have crossed their minds that they may leave me much: anything, in fact. But the impact of the mass Council House sell-off of the Thatcher era is now reaping these types of debates. It seems that well-meaning journalists find it easy to forget just how impossible property ownership still remains for many people, how new an experience it is, and how it has been sold to them as a concept now for perpetuity - it is the reinforcement that it is not only acceptable but a simple expectation that one will inherit property from your family. How ironic that many of those complaining loudest are the same families now widely dispersed by geography to their own mortgaged properties across the country (no longer resident with those who make these bequests of houses).

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