[Politics] Should Stamp Duty be scrapped altogether?

[beorhthelm]

Or we could find something in between - allow people to hand down some cash to their kids, but bring in a high tax rate at a certain amount, or increasing percentages the higher the value. At the moment, IHT is only applied if your estate is worth over £325k, or over £500k if giving it to your children or grandchildren.

The problem mainly lies with property imo. I'm 32, and I don't think I know any couples who were able to buy a house before the age of 30 without getting help from parents or grandparents (and much harder for single people). And most of them have well above average household incomes. Nearly all of our parents were able to buy houses in their early 20s with little help from their parents. With increasing rents and house values, this situation will get worse and worse unless something changes.

Inheritance is intrinsically linked to this - it wasn't such an issue in the past, so I can understand why older generations don't see it as much. But for younger generations, it will increasingly be the case that the only way to buy a house is through inheritance.

Oh, and Child B wouldn't be mortgage free before 50 because they'd have been paying rent for the first 10 years (minimum) of their career. Unless they'd manage to get a significantly higher wage than Child A, but then it's not a like-for-like comparison.

point was the arguement you made leads to a conclusion we could simply take everything to be "fair". after any tax the inheritor still has more money than those with no inheritance at all. also the example of child A & B is too narrow, we could have a hundred different scenarios of peoples lives, the tax system shouldnt be based around one or two examples. your issue is with property values, which is due to excess demand in the south east and not enough building. inheritance and IHT doesn't solve that.

 

[Seagull27]

point was the arguement you made leads to a conclusion we could simply take everything to be "fair". after any tax the inheritor still has more money than those with no inheritance at all. also the example of child A & B is too narrow, we could have a hundred different scenarios of peoples lives, the tax system shouldnt be based around one or two examples. your issue is with property values, which is due to excess demand in the south east and not enough building. inheritance and IHT doesn't solve that.

That's taking it to the extreme though. I think things could be made fairer, I'm not suggesting that we share all wealth amongst everyone equally.

I think IHT should kick in lower, at lower rates, and step up - instead of kicking in at 40% on everything above £325k, or £500k to children and grandchildren, I'd say it would be better to start it at, say, £50k and 5% and stagger it upwards. And have a higher rate of 50%+ for anything above, say, £1m.

(I've made up the figures here, I don't know what these levels and values should be, but the current level seems too high).

Also it would be better to tax the recipient rather than the giver - so if you want to share £40k among 10 people then you can do it tax free, but £400k to one person is taxed. It's better for the economy for lots of people to receive smaller amounts as it's more likely to be spent over and over(and taxed), rather than sitting in an asset for years until it's passed to the next person.

 

[beorhthelm]

Also it would be better to tax the recipient rather than the giver...

agree there, get rid of IHT and treat as income tax for the recipient.