Please tell me that post is a joke and you've already established what will happen to your kids if you both die in an accident. I assume whoever you've asked to be their guardians already has somewhere to live, or else they may not be the most sensible choice...
erm, also, you have done some IHT insurance provision I assume.
My point being the Gov is going after the low hanging fruit. Its multi-billionaires & tax avoiding mega-corps that are really the culprits when it comes to hoarding wealth.
Going after mega corps for tax is not really about reducing inequality (it is a good thing to do tho). The existence of billionaires is essentially a failure of social policy - no one should have that much money. Anyway, there is no reason we could go after both of those AND have a 100% inheritance tax - it doesn't have to be an either or.
I live in the south east, have a house that’s probably worth £700k. Its not particularly lavish (130sqm).- I wouldn’t be surprised if in, say, 5 years, it breached the £1m threshold (not that I’m doing anything to it, thats just inflation for ya). I have 2 kids aged under 4.
Coincidentally, I am in a near identical same situation as you, the main difference being that my kid is on the way (gulp!) rather than having arrived. I would think in that situation there would need to be the ability to pass a house onto a partner - this would be fairly easy to do and not create a loophole. I'd assume that the majority (tho by no means all) would be in a situation where the house is in joint names anyway. Most people in this situation will also have some kind of life insurance that'll pay out if someone suddenly dies in an accident!
My fundamental point is that I already pay lots of tax, and i'd be happy to pay more to have a better, more equal society. And that would also include having what i leave my kids taxed at 100% if it meant that all kids would have an equal start in life (i duno, you could stick all the money in a pot and everyone gets 30k at 21 or have better schools).
(And no, i'm not going to do it unilaterally! I'm not an idiot.)
To answer the OP
You have to applaud him for looking at this rather than the usual suspects.
It's just lip service. Nothing more.
AND have a 100% inheritance tax – it doesn’t have to be an either or.
You’re in la-la land if you think that’s ever going to happen. That idea has zero chance of ever becoming real.
For a start not a realistically electable single party has that in their manifesto.
Focus on the achievable, not what’s on your fantasy utopia wish list.
You’re in la-la land if you think that’s ever going to happen. That idea has zero chance of ever becoming real.
Clearly. Doesn't mean it shouldn't tho. I thought this was a conceptual discussion about inheritance tax.
Wow
Find it amazing that people think if I save up all my life to leave something for my kids that the Govt should take it all and they should get nothing.
Astonishing.
Property is a crime I assume.
Yeah well, welcome to stw. For those suggesting 100% tax, is there anything stopping you from doing this in your will?
You taxed on income, you tax on purchase, you then tax on savings and then tax on death. The reality of this tax is that the super rich won’t end up paying it. It’ll be the middle class and upper middle class, especially the way properties in the south are going.
Luckily the majority of the uk think this tax should be abolished or the threshold increased.
But given that point is currently £1m…. I’ll just write that in words…. One million **** pounds. Bullshit.
Is it? I thought it was £325k per person, or £650k When the second person in a marriage dies? It’s a lot, but it’s not a million.
note that the limits for a defined benefit pension (which, conveniently, MPs have) are significantly higher, and worked out by income (I think its something like £55k/year) so you can just retire earlier to keep the whole lot. This compares to less than £20k/year you would get if you put £1mm into your pension pot and retired at 55 as a normal punter
Amazingly, all wrong, in every way.
Would it be fair that if my wife and I were killed, the kids couldn’t continue to live in the same home (along with, presumably, some relatives or something) just because its in an expensive area? if you, say, halfed the threshold, you would make that the default stance for a lot of people living in the south east.
About as fair as them pocketing the thick end of half a million quid each when they come of age.
There should never be a 100% tax rate on anything, ever, even with a very high threshold.
Property is a crime I assume
You're ok if the particular property is an artisan made wood fired beard clipper that has been in the family for generations.
Other examples of acceptable property can be produced on request.
FWIW I expect to inherit a big fat zero from my parents. However I don't want the government taking anything I manage to accrue before it can go to my offsprogs.
Is it? I thought it was £325k per person, or £650k
Away with your facts, swine!
Amazingly, all wrong, in every way.
care to educate us as to why? Working on this https://www.moneyadviceservice.org.uk/en/articles/the-lifetime-allowance-for-pension-savings
the lifetime allowance is £1,073,100 for a pot, or an annual income of £53,655 (around £55k) if you are on defined benefit. According to the best buy table here -> https://www.hl.co.uk/retirement/annuities/best-buy-rates an RPI linked (as a lot of defined benefits would be) pension drawn at 55 on the max pot would give you an annual income of just £16,976 (under £20k).
I have just taken the time to re-read. My original post needs adjustment....
I agree with CGT being aligned with income tax.
I still think there is too much tax avoidance and evasion - let us close loopholes down.
I disagree with heavier inheritance tax - if we get the pre-death taxes right, folk have paid and contributed to society already, no need to extract more.
Away with your facts, swine!
It's not a fact, or at least it's not a relevant fact in isolation. It's a gross oversimplification of the situation
from https://www.gov.uk/inheritance-tax :
If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.
If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1 million.
Is it? I thought it was £325k per person, or £650k When the second person in a marriage dies? It’s a lot, but it’s not a million.
see above
Not really the same as giving someone a million quid though, is it, especially if those inheriting it already live there.
I'm opposed to the state profiting from the death of its citizens.
Which is a problem because I favour inheritances being limited to say no more than a freehold house each and about a years income equivalent for each adult offspring. There would need to be special measures for youngsters and dependent offspring.
But taking an entire legacy is like cancelling Xmas.
When you're failing if there's no incentive, there's no motivation for one of your kids to hold the pillow over your face to help you on your way... 🙂
care to educate us as to why?
You are talking about the LTA for pension savings. Nothing to do with either CGT or Inheritance tax. It's just the amount you can have before being hit with a 55% tax on your pension.
Pensions are outside your estate for Inheritance tax purposes but that does not mean your kids will not be taxed on the money they get from it (if any)
No one in there right mind buys an annuity with 1 million. It will easily provide 40k per annum for a retirement without affecting the pot total.
The LTA is worked out for DB pensions using an amount of years, not a yearly sum. Two very different things.
So yup, wrong I'm afraid
It’s just the amount you can have before being hit with a 55% tax on your pension.
You mean before the additional 25% rate kicks in on top of your existing tax rates, but only for the part of your pension over the LTA. 55% only applies to the part of lump sums over the LTA.
So, you too are wrong I'm afraid.
You mean before the additional 25% rate kicks in on top of your existing tax rates, but only for the part of your pension over the LTA. 55% only applies to the part of lump sums over the LTA.
So, you too are wrong I’m afraid.
What are you on about ?
I said they apply a 55% tax and that is exactly what they do.
if you take the sum above you LTA as a lump sum they apply 55%, if you take it as drawdown they apply 25% before you take it and pay your normal tax rate.
So no, not wrong in any way. I know exactly what they do. Please do not try an apply pedantry because you want to make me look like I do not know what I'm talking about.
It still has nothing to do with CGT or Inheritance tax.
I earn some money, pay tax on it, save it up. I’d like to give it to my children. Money can be gifted without tax issues in the normal run of things.
Then before I give them it, I get killed while out my bike by a selfish person in a car who *just had to* be in front.
Why should this money be taken by the state?
Because the bulk of inheritance is property. It wasn't earned income that tax was paid on.
Someone earning an average income bought a house for 3x their salary at that time. Then there has been a massive increase in house prices and their lucky offspring get to inherit (if they're in the south east of England) a house that might be worth 20, 40 or even more x average incomes now. There's an argument for there not being CGT on your main home (in order to make it easier for people to move to follow work or whatever else during their lifetime). I'm not sure theres a good argument for there being no CGT on property on death.
You want CGT added to Inheritance tax ? Based on what increase ? from when to when ?
Increase in property value since purchase up to changing hands (death), I presume. (Not something I’d like to see).
I cannot think of a more stupid idea.
I’m not sure theres a good argument for there being no CGT on property on death.
Because the longer you’d owned your house, the less likely your kids will be able to afford to keep it?
I cannot think of a more stupid idea.
it would be massively unpopular but doesn't mean it's not a good idea. Not every country has a CGT exmempion on the main home.
it would just operate the same as other CGT rollovers - you don't have to pay until you actually leave the housing market (whether during your life or on death).
Having CGT on housing (even if deferred until death) would have a big impact to help keep prices lower and more affordable.
Fair few people have children doing school runs down to south side who are aggrieved. Also some estate agent rumours about negative effect on house prices.
Do people really want to live in their parents house? if more than one child who gets it? Second homes are a massive negative impact on housing supply.
Our housing market is a mess - the only way you can afford to buy in many parts of the UK is because of a big transfer of wealth from parents. Anyone who's parents weren't lucky enough to buy when prices are low is locked out for generations.
Our housing market is a mess – the only way you can afford to buy in many parts of the UK is because of a big transfer of wealth from parents.
Indeed. The difference between have and have not today is usually due to inherited wealth.
That conflicts with my feeling that if you've earned and paid tax all your life, why do you then pay again on death.
CGT should be payable on all income and growth (houses, shares, investments, company dividends etc) that isn't your main home, and CGT should be aligned with income tax + NI rates.
Come to think of it, scrap NI and roll it into one income tax payment, aligned with CGT.
matt_outandabout
SubscriberThat conflicts with my feeling that if you’ve earned and paid tax all your life, why do you then pay again on death.
The counter to that is that if you earn and pay tax, why do you pay tax again when you spend it? Taxing spending but not taxing inheritance basically rewards taking money out of the economy.
Ultimately "why should" is a pretty good argument against all taxation, and is countered with "because it's necessary, not because it's necessarily right" And the cold equations of that mean that anything that benefits someone passing on a million pound estate, is to the detriment of people who pass on a funeral bill and an old tea set.
Thing is, I'm pretty sure the balance is wrong now- the amount you can pass on tax free is huge, and considering that pretty much everything in our economy is weighted towards the already wealthy, that's a problem. It's just, I don't know where the right balance is. But I do know that when my mum passes away, I stand to inherit a decent amount and I really don't think it makes sense that as it stands it's tax free. OTOH I pay tax on the far smaller amount that I actually earn.
If feel a compulsion to pay tax on the portion of untaxed inherited wealth, you can.
Hands up who would, voluntarily? There’s lots of ferry contracts to be awarded, and bridges from Scotland to Ireland to fund...
Thing is, I’m pretty sure the balance is wrong now- the amount you can pass on tax free is huge, and considering that pretty much everything in our economy is weighted towards the already wealthy, that’s a problem. It’s just, I don’t know where the right balance is
I agree with both parts of this.
I also think our tax laws are so complex that they help tax avoidance and tax evasion.
You are talking about the LTA for pension savings. Nothing to do with either CGT or Inheritance tax. It’s just the amount you can have before being hit with a 55% tax on your pension.
correct, I never mentioned either CGT or inheritance tax. I was making another, correct point
Pensions are outside your estate for Inheritance tax purposes but that does not mean your kids will not be taxed on the money they get from it (if any)
again, agreed, I didn't claim otherwise.
No one in there right mind buys an annuity with 1 million. It will easily provide 40k per annum for a retirement without affecting the pot total.
an annuity is just as valuable with larger sums as it is with smaller. a £40k (inflation linked) drawdown on a moderately invested portfolio would run out of money after approx 30 years (depending on the exact calculations you choose to use), So there's a decent chance of outliving the cash - 1 in 8 men live to 100 at the moment.
The LTA is worked out for DB pensions using an amount of years, not a yearly sum. Two very different things.
yes, they calculate the amount, multiply it by 20 (an assumed likely length of drawing a pension, not a number of years you may actually take it for), and see if its under the limit of £1,073,100. 1073100/20 is, err, 53655.
So yup, wrong I’m afraid
not sure where
