Thursday, October 11, 2007

Inheritance Tax too.

Silly me, I probably over-reacted to the announcement on Inheritance Tax - though it did sound as if single parents were getting shafted again. I've read the Telegraph article and it is obvious, I suppose, that each individual estate should be taxed individually. But there still remains the thorn that couples will be able to leave £600,000 tax free to their children, while we single parents will only be able to leave £300,000 or thereabouts.

Now I'm not a rich person - far from it, but my modest maisonette in Hove is actually worth around £450,000, or so I've been told.If I'd had this sort of capital 30 years ago, I would have been considered seriously rich, and that's the whole point about Inheritance Tax. It was set up to tax the really rich on their vast estates, but now affects ordinary people whose houses, at £250,000, are far from expensive or luxurious! Very cleverly, successive Governments have 'overlooked' re-setting the threshold, so that increasing numbers of the middle classes with nice houses are nicely caught and nicely taxed - again.

I bought my first property in 1974, a cottage (an old Forge) in Gloucester for £10,100 at Auction. Just imagine how many of those I could have bought for £250,000! And the fact that my "estate" would now be worth so much is entirely due to the fact that I have worked at improving the houses I have lived in, and have moved on as the market has moved up - just like many people. We moved from Gloucester and London to Kent, from Kent to Essex, from Essex to Cambridge and from Cambridge to Brighton. And during that time it has probably cost at least £50,000 in Estate Agents Selling Fees, Mortgage Fees, Solicitors Fees, Stamp Duty and Removals, all of which had to come out of earned and taxed income. So the Government, over the years, has made a pretty decent profit out of me. I was able to do this because, at the start, I had managed to save £3,000 for a deposit (from my taxed income of course, I didn't have any other income!). So now, if I drop off my perch tomorrow (which I hope I can avoid), the increase in my property's value means that my children would be liable for Inheritance Tax at 40% on everything above £285,000. I am a single (divorced) parent with two children, so they would be the only people to inherit. And if I were a couple, they would be paying nothing! Can this be fair? I think not. Too much information? Probably, but you can see my point I'm sure...

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