Think tank wants £10,000 ‘citizen’s inheritance’ for all 25-year-olds

Cash giveaway for millennials: Older Britons should fund £10,000 to each 25 year old so they can buy their own home, says think tank

  • Resolution Foundation set out pans to tackle intergernerational unfairness
  • It wants to give all 25 year-olds cash giveaway – no matter how rich they are 
  • Think tank wants to hike tax on ‘silver strivers’ who work past pension age 
  • Critics have warned Theresa May the plan would bomb on the doorstep  

Ministers should launch a tax raid on older Britons to pay for all 25 year-olds to get £10,000 to help them buy a home, a major report today says.  

The Resolution Foundation says the Government should step in and create a ‘citizens inheritance’ for all young people – no matter how rich they might be.

The cash could also go towards paying off their tuition fee costs or to meet caring needs, the think-tank said. 

The cash giveaway would be paid for by overhauling inheritance tax so that people would start paying it at a far lower threshold and redistributing the money.

The Resolution Foundation Intergenerational Commission is also calling for pensioners who continue to work to pay national insurance for the first time to  fund a £2.3 billion windfall for the NHS. 

But critics warned that the policies would be electorally disastrous as it is unfair to force ‘silver strivers’ who choose to continue to work after they could put their feet up and retire to pay more. 

Millennials (the purple line in the graph) have lower home ownership rates than previous generations, including baby boomers (turquoise line) and generation X (yellow line). To tackle the problem, the Resolution Foundation wants a ‘citizens inheritance’ for all young people – no matter how rich they might be – to help them buy a home

The Resolution Foundation’s commission said that the proposed £10,000 cash give-away would help transform young people’s lives and tackle the problem of young people getting on the housing ladder

Baroness Altmann, Tory ex pensions minister, said the plan would be as unpopular with voters as the doomed dementia tax – which was blamed for the Tory Party’s election disaster.   

She said: ‘Only about one in 10 pensioners continues working past state pension age and are not all well-off. 

‘Many older workers keep working because they do not have good pensions and are trying to make ends meet.

‘It is wrong to see them as an answer to the care funding shortfall. Why should they be targeted to pay for other people’s care while non-working pensioners, many of whom have generous, often taxpayer-funded, pensions would pay nothing?

‘I hope the Prime Minister will heed the lessons of the last election manifesto, which proved how politically toxic the issue of care funding can be. 

‘The aim should be to share the burden of care funding, not single out one group to find funding for everyone else.’  

Under the proposals recommended today, the current inheritance tax system would be scrapped.

Currently, you can inherit up to £850,000 tax free and pay 40 per cent tax on anything higher than this. 

Research shows that young people today are very pessimistic about the prospects of being able to own their own home and having a secure job

But under the proposals, people would only be able to inherit £125,000 over their lifetime before taxes kicked in.

Anything above that taxed at 20 per cent up to £500,000 and 30 per cent after that.   

The commission estimated that despite lower rates, the move would raise an extra £5 billion initially by curbing avoidance.  

What are the proposals in the Resolution Foundation Commission report? 

The Resolution Foundation’s report into tackling intergenerational unfairness contains a series of proposals. 

Introduce a £10,000 cash give-away to 25 year-olds 

This would be paid for by overhauling the inheritance tax system: 

Currently, you can inherit up to £850,000 tax free and pay 40 per cent tax on anything higher than this.

But under the proposals, people would only be able to inherit £125,000 over their lifetime before taxes kicked in.

Anything above that taxed at 20 per cent up to £500,000 and 30 per cent after that.   

The commission estimated the move would raise an extra £5 billion initially by curbing avoidance.  

Increase taxes on silver strivers:

Those who choose to work beyond their retirement age will have to pay national insurance contributions on theuir earnings for the first time ever.

The cash raised would cover NHS and care costs.  

The cash raised would go to bankrolling a £10,000 giveaway for 25-year-olds to help them get on the property ladder, pay for education, set up a business and invest in pensions.

Executive chairman Lord Willetts, a Conservative former minister, admitted the recommendations in the report were ‘not easy or comfortable’ but said many no longer believe Britain’s young and old are being treated fairly.

He said: ‘Britain’s contract between generations lies at the heart of society. As families we provide for our children and parents at different times. 

‘We expect the state to support these natural instincts – but too often it is tilted in the opposite direction.

‘Many people no longer believe that Britain is delivering on its obligations to young and old. But our commission shows how Britain can rise to this challenge.

‘From an NHS levy to put healthcare on a firmer financial footing, to building more homes and a Citizen’s Inheritance to boost young people’s career and housing aspirations, our report shows how a new contract between generations can build a better and more unified Britain.’

The commission was chaired by the peer alongside Frances O’Grady, TUC general secretary, and Carolyn Fairbairn, CBI director-general.

It also called for an ‘NHS levy’ funded by national insurance on the earnings of workers over the state pension age as well as on some occupational pension income.

It comes after reports that Health Secretary Jeremy Hunt is considering putting forward proposals echoing the recommendation, a measure.

Council tax should be abolished and a property tax introduced in its place that would include surcharges on second and empty homes but stamp duty would be halved to encourage people to move, under the report’s plan.  

Theresa May (pictured going to church yesterday with her husband Philip) was warned that the think-tank’s plans would be unpopular with voters 

Ms Fairbairn said: ‘The idea that each generation should have a better life than the previous one is central to the pursuit of economic growth. The fact that it has broken down for young people should therefore concern us all.

‘We need individuals, businesses and the state to pull together to address this challenge, and lift the living standards of young and future generations.’

The commission also makes a series of other recommendations, including improving employment security, a £1 billion ‘better jobs deal’ to help struggling young people get into work and bolstered rights for renters.

It found millennials, people born between 1981 and 2000, are earning the same as those born 15 years before them were at the same age and are only half as likely to own their home by age 30 as baby boomers, born between 1946 and 1965, were. 

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