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His family get taxed 40% of the value of the home (which was bought using money earned and taxed already).
It most cases only some of that money (and likely only a small fraction) has been taxed. Much of the value of a property will be from the (untaxed) growth of its value over time.
Consider someone who bought a house in 1980 for £25,000. Someone gets to inherit it in 2015 and it is now worth £2,500,000.
How much of that £2,500,000 has come from already taxed income? The £25,000 mortgage might have been paid off by only paying ~£40,000.
Even if someone has slowly climbed the property ladder over that time most the incremental growth would have come from house price rises and those capital gains along the way aren't taxed (assuming it's been a primary residence).
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Greenbank
Calben
I don't actually see the problem with the current stance on inheritance tax. Joe Bloggs works his entire adult life to build a secure environment for his family. He pays all appropriate income tax. He dies knowing the security he has worked for hard is secure in the home he leaves behind. Let's say his home is his entire estate for this argument. His family get taxed 40% of the value of the home (which was bought using money earned and taxed already). It is effectively double taxed money. Is this not an appropriate level of taxation? Or am i missing something significant?