11 February 2013

Red Osborne

So the government intends to meet social care costs by freezing the threshold for inheritance tax:
The £1bn cost of the new cap – this sum is bound to rise massively – will be funded by a stealth hike in inheritance tax. Everybody with sufficient assets to qualify will pay far more in tax, regardless of whether they end up benefiting from state-financed care. This will be imposed by freezing the inheritance tax-free threshold of £325,000 until 2019, even though inflation on the retail price index is currently 3.1 per cent. By 2019, the threshold would probably have increased to £420,000 without the freeze; so this is a pretty massive raid and will hit many elderly folk and their children. In many cases, this will be very unfair: a family that cares for its own elderly relatives will be hit by the tax, even if they were able to avoid using institutionalised care.
Is it a stealth hike?  Not if everyone knows about it.

Is it unfair?  Do we really want inherited wealth to cascade down the generations, maintaining those and such as those in the position to which they have become accustomed?  IMHO, £325K plus 60% of the remainder should be more than enough for any set of heirs.

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