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Hello and welcome to this week’s Home Front. Let’s talk about inheritance. It’s a thorny subject regardless of whether you’ve inherited money or not. But if you’ve ever wondered how your “freelance” friend who’s always on holiday managed to buy their four-bedroom house, this one’s for you.
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.
For this reason, any changes to inheritance tax – such as the tweaks to thresholds that Chancellor Rachel Reeves is rumoured to be considering – will cause panic among those 20-, 30-, and 40-somethings who are hoping to inherit something up and down the country.
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.
An annual report from the estate agency Savills estimated that 173,500 first-time buyers (that’s 52 per cent of the total) were given financial assistance in 2024, receiving a total of £9.6bn – an average of around £55,000 each.
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.
Homeowners in the pre-war and baby boomer generation that make up millennials’ parents and grandparents benefited from historic house price inflation in the 1980s, 90s, 00s and 2010s. They therefore often have valuable homes which have risen significantly in value to pass on.
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.
As things stand, inheritance tax (or IHT) is charged at a rate of 40 per cent on assets above £325,000, with an additional £175,000 allowance if the deceased person’s main residence is passed to their direct descendants.
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.
Reeves wants to bring in changes which will impose up to 40 per cent IHT on unspent private pension pots, which is expected to raise about £1.5bn annually for the Treasury by 2029-30.
She has pointed to IHT as an example of an area where changes could be made.
One idea rumoured to be under consideration is the imposition of a “lifetime gifting allowance”, which would prevent older people from avoiding IHT by giving away homes and cash before they die.
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.
But any increase to IHT on primary residences could see people – particularly those with families in London and the southeast, where housing is more expensive – hit with bigger bills.
Reeves must balance any decision to hike IHT further on a knife-edge.
On the one hand, it’s true that inheritance has skewed Britain’s housing market and further entrenched wealth inequality in this country. Well-meaning as the Bank of Mum and Dad might be, its funding has meant that some young people have been able to buy homes they wouldn’t otherwise have been able to afford and, therefore, propped up unaffordable house prices which are beyond the reach of those without family help.
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.
And so, hiking IHT now would penalise those who have been banking on inheritance to buy a home or move into a bigger one, while letting others who have already been gifted homes or vast sums of money off the hook.
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.
However you slice it, Reeves is probably going to make herself unpopular here, and, in reality, she’s unlikely to do anything that can truly address the inequity in Britain’s housing market that now exists between those who have wealthy parents and those who do not.
To do that, she needs to build a huge number of social and council homes.
Unless you are too wise to be on X, you’re probably aware that there is an ongoing debate about crime in London. Specifically, the idea that parts of London are “no-go zones” – an idea that once resided on the fringes of hard right politics – is now regularly talked about as though it is fact.
I’d like to offer a counter to this idea.
While observing this festering debate unfold last week, it dawned on me that London – my hometown – has changed an enormous amount since I was growing up here. But not always for the worse.
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.
She then lived in a rented home with her parents and nine siblings, which, as she liked to tell me often as a child, had an outdoor toilet.
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.
Now, none of this is to say London is perfect, and I’m certainly not suggesting that there is no crime. I had my phone snatched two years ago; it was a horrible experience.
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.
All that is to say, don’t believe the headlines – there’s a more nuanced story about London to be told. There has always been crime in the Capital, as there has in other urban centres around the world.
I do wonder if sometimes the issue is actually gentrification?
My Nan was horrified when I moved to Hackney after graduating from university. She’s still shocked when I tell her that I am going to Deptford to visit my friend’s bar there. When she was a young woman, as she puts it, “these really were places you wanted to get away from”.
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
Over the weekend, I listened to a podcast about Pompeii presented by Dan Snow and The i Paper’s own columnist, Dr Kate Lister. I found the section on Pompeii’s notorious brothel – which was itself a tourist destination for the Romans – particularly enlightening.
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.
Hence then, the article about first time buyers could be the real losers of inheritance tax changes was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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