Interesting Links for 11-10-2016

[andrewducker]

Great British Bake Off an example of the legal challenges in protecting TV formats (tags: tv copyright trademark intellectual_property ) Leaked Files Reveal RBS Systematically Crushed British Businesses For Profit (tags: banking scotland OhForFucksSake ) Training men to judge women’s sexual interest more accurately (tags: sex psychology ) How

Comments

Inheritance should go directly to grandchildren to help

[drdoug]

I'm not desperately keen to defend the Tories, but I do think this story is being spun a little unfairly. It's hard to see the full context, but it looks like Gavin Barwell was saying what his mother was planning to do and, on being asked directly if he was Ok with it, said that he was fine with that (which is the source of the "I have a nice house" comment). He was then asked whether other people should consider transferring their wealth in the same way. What else should he have said but yes there? The question implicitly supposes that we're talking about other people who have wealth to transfer. He wasn't saying they should do it, or that young people should expect it to happen. Or indeed that this was a good thing.

The Telegraph version of the story gives little bit more context from the interview, including him saying "There is a profound inter-generational unfairness that has been created by this policy over a number of years" and "I don’t want to live in a country where you have to have a wealthy grandparent to have a chance of getting on the housing ladder in this country. " Which is pretty much the outraged reaction to the spun story.

(It's worth adding that I'm pretty unconvinced by what I can glean of his plans to change this, and what there are seem likely to run in to opposition from Tory heartlands, so one can take the depth of his convictions on the matter with a pinch of salt.)

RE: Inheritance should go directly to grandchildren to help

[drdoug]

PS Thanks for the link love on my post!

RE: Inheritance should go directly to grandchildren to help

[andrewducker]

Thanks - that does sound a lot more reasonable.

(Although I also agree that it's unlikely that their policies will do much to actually help.)

Re: Inheritance should go directly to grandchildren to help

[naath]

I guess that makes sense. It's not a good policy position, but if you are a rich grandparent it makes sense as a personal choice, and saves on IHT :)

But I have neither grandparents nor children so not applicable to my life.

Re: Inheritance should go directly to grandchildren to help

[drdoug]

saves on IHT

:) I'm not sure it does, though, unless you give it away and don't die for 7 years afterwards (though my grasp of IHT is pretty shaky). I think there was an extra allowance recently introduced for IHT if you pass on a residence to a direct descendant, which would be covered in this situation - but I don't think it makes any difference if you bequeath it to a child or a grandchild.

But I have neither grandparents nor children so not applicable to my life.

Yeah, absolutely - almost nobody who wants to buy a house has grandparents who die at the right moment in time leaving enough assets that they can pass on via an inheritance that will be a material help in buying a house.

Re: Inheritance should go directly to grandchildren to help

[naath]

I mean saves on iht vs leaving it to the children who leave it to the grandchildren later.

RE: Re: Inheritance should go directly to grandchildren to help

[drdoug]

Ah, got you, that makes sense.

RE: Re: Inheritance should go directly to grandchildren to help

[skington]

Every time you die and leave your primary residence to a direct descendant who lives in it for 7 years before dying themselves, that's between £325k and £500k saved, depending on where you are on the schedule. That would have to be a really nice house for it to be worth it.

Which it is, as it happens. Assuming Gavin Barwell's father is dead and his mother is using her late husband's allowance for inheritance tax, there won't be any inheritance tax payable. (IANAL, I just read the gov.uk website.) So what's happening is that Gavin Barwell's mother is leaving her £700k house in Croydon to the grandchildren because Gavin Barwell already has a £750k house in Croydon. I assume his brother is similarly-well-off. This isn't exactly an ordinary case.

Re: Inheritance should go directly to grandchildren to help

[naath]

So compare "grandparents die, leaving everything to grandchild, and 2 weeks later a freak accident kill the parents" to "grandparents die, leaving everything to child, and 2 weeks later a freak accident kills the child+spouse".

In the first case the grandchild gets a "primary residence" inherited from the grandparents (assumed married) and pays almost not tax on it (325*2 = 650 but "primary residence" might cover you up to 700). Then they inherit the "primary residence" of their parents, and similarly pay almost no tax.

In the second case the child inherits the grandparents house, and similarly pays little tax. But then the grandchild inherits two nice houses in Croydon, only one of which is a "primary residence" of their parents; and pays 40% of the value of one of them...

That's quite a big tax difference, and if your intention as a parent was in fact "just hold onto the money for the kids" rather than "spend it all" it's worth doing that tiny bit of tax planning.

But if the parents need the money, or if there isn't any/much money (per grandchild I guess), or or or... then it wouldn't be so obviously worth it.