You struggle, scrimp and save, and battle against all the odds to somehow obtain that illusive dream of homeownership...your very own piece of Britain. But as a nation we are under siege, surrounded by an invading army waiting to steal away that which we worked so hard to achieve. This grim hoard hails from the land of HMRC and its army is inheritance tax.
Many happily argue the case for and against the issue, a perceived need to stem rewarding unjustifiably and to level the financial social playing field, versus an individual's rights to manage hard earned assets and negate double tipping from the taxman.
Whatever your view, there is one massive injustice that threatens the ability of any future generation to have that which we hold most dear...a place to call home.
With current individual asset levels set at £325,000 before the taxman comes reaping his 40%, some argue this is a satisfactory level, stemming the ability for millionaires to pass on untold fortunes. It sounds a vast sum, but average house prices are now at £253,000 across the country (£458,000 in London) and are once again rising.
What if on that sad day the sole asset, the only gift you can leave your child, is the family home they were raised in? Some would say that such a sum buys a 5 bedroom detached house in areas across the country so is perfectly fair. Good. Congratulations. Your child gets to keep the family home they have known their entire life, a place to raise their own children, safe, secure and able to continue the stability you created.
But why should you be able to leave such a legacy when the son or daughter raised in a tiny 2 bedroom flat in dearer areas is forced to sell? How does the measure of your love, of your gift supplant that of others just because of your postcode?
The home isn't just a financial measurement for the HMRC abacus, it is a lifetime of memories, of emotion, of comfort. At that most traumatic of times, as death yields its heartless scythe, how can it be justified for the taxman to punish with a second attack?
I am not advocating offspring should be allowed to inherit a house merely out of sentimentality, like some family photograph from holidays past, rather that a time is coming when it may be out of necessity if we are to allow elements of future generations to have a family home themselves.
Some 64% of first time buyers in 2012 were able to buy their first home thanks to the Bank of Mum and Dad. This was made possible because these parents were of a generation that needed just 12% of their annual income to secure a deposit for their first home. Now it is 82%. They were able to pay off their mortgage on average by the age of 56, now it is 62...and so the cycle is extending, with each of us paying mortgages and working longer in our lives, meaning less and less aid available for the next generation.
With monthly average rental at £848 (£1348 in London) and rising, how will future homeowners be able to save the funds to reach even that first rung on the property ladder, let alone a home to raise a family in?
Surely one answer must be to allow them to inherit tax free the house their parents worked so hard to make home? In doing so you allow for a more fluid housing market and one with greater stability. More first time properties will reach the market as people sell to move to their inherited family homes, or failing that, rental rates may stabilise as these smaller properties are rented out rather than sold. This creates a more affordable housing market for those not bequeathed an inheritance, and may lower rents allowing for greater savings towards a deposit.
What if the beneficiary just sells the family home and pockets the cash? Fine...tax them if you have to, because what about the son or daughter who can't afford the bill to save their family home and have no choice but to sell? You might argue at least they would pocket something, and can put that towards a new home in a cheaper area, but why should they have to lose something which is far more to them than just bricks and mortar?
Rather than simply raising exemption values to £1 million whatever the asset, as is currently pledged, why not exempt the family home from Inheritance tax when it is to be used as the primary family residence. Allow a parent, any parent, to continue the comfort and stability they spent their days providing in life. Allow them to provide a home. They will have earned the right.
