This is Home Front with Vicky Spratt, a subscriber-only newsletter from The i Paper. If you’d like to get this direct to your inbox, every single week, you can sign up here.
As I wrote for The i Paper back in 2020, Britain is an inheritocracy now. That is a country where young adults’ fortunes are defined by how much wealth is passed down from their parents or grandparents – not by their own hard work or income.
Today, you’re more likely to become a homeowner if your parents owned property. And last year, almost half of first-time buyers were able to get on the housing ladder because they’d been given money by family members.
It’s fair to say that it is now very difficult for young adults to buy a home, particularly one large enough for a family, in a desirable location, without family help.
As a result, rather morbidly, huge numbers of younger people are now also banking on inheriting their parents’ homes in order to progress in life – whether that’s buying their own family home or paying off large mortgages.
Pensions can currently be inherited tax-free if the deceased is under 75, up to £1.07m. If over 75, beneficiaries pay income tax on inherited pensions.
She has pointed to IHT as an example of an area where changes could be made.
At present, no taxes are due on gifts given if the person who gifted lives for seven years after sending their relatives money or property. Gifts given within seven years are taxed on a sliding scale if the person who gave them dies within that period. However, a “lifetime gifting allowance” could theoretically mean this is reduced and relatives pay more tax on gifts.
Reeves must balance any decision to hike IHT further on a knife-edge.
On the other hand, changing IHT now would be a little bit like shutting the door after the horse has bolted. House prices have stopped rising so high, so fast, but they remain at near historic highs. And as I wrote in my column this week, even though wages have been going up and increasing buyers’ purchasing power, we’re nowhere near at a point where family-size homes are within reach of most young adults who need them.
Add that to the changes that Reeves reportedly also wants to make to Stamp Duty – cutting it for cheaper homes and introducing a ‘proportional property tax’ for more costly ones – and you could find that people whose families are from more expensive areas are hammered with new taxes twice.
To do that, she needs to build a huge number of social and council homes.
I’d like to offer a counter to this idea.
For instance, my 91-year-old grandmother – who now lives in Croydon – still talks about having to move out of Deptford when the slums were cleared there.
Indeed, her brother – my great uncle – used to have a sewing machine shop on Hackney’s Mare Street. It is now a trendy bar where I regularly see people in their 20s enjoying expensive cocktails and spilling out onto the street at the weekend.
It’s true that the prevalence of certain crimes, including violent crime, has increased. But it’s also true that the living standards and life chances of Londoners have vastly improved over the last century. And if you dig a little deeper into the crime statistics, the recorded instances of other crimes – such as burglary and theft from a person – appear to be decreasing.
I do wonder if sometimes the issue is actually gentrification?
Today, you have expensive bars and restaurants sitting side by side with pound shops and social housing. Different communities are exposed to one another. That’s one of the best things about the Capital, but it may also be a reason why some middle-class people are sometimes exposed to things – including phone theft – which, perhaps, they didn’t experience growing up in leafier places.
Vicky’s pick
I visited Pompeii back in January and only managed to see half of the city. I hope to go back and see the rest soon. If you go, be prepared to walk and, don’t be like me: set aside more than a day to see everything.
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