So they're paying tax on what someone else has paid tax on.
Much like paying council tax with your taxed salary.
Should your parents require lengthy care home treatment as they near the end of their days, will you put your hand I your pocket to pay for this out if the assets that would have otherwise scored against the means test. Or are you happy for the costs to be picked up from general taxation?We may just take her for a long walk off a short pier. 😯 🙂
[quote=DrP ](Some/all of this cruel venture may be made up!)
This bit?
It's OK though - she's only 55 and still works, so can afford to pay me.
I find it amazing that people build up an pot of money for their retirement, then want to give it to their children and expect the state to pick any care bills. You save money for YOUR rainy day and now it is raining. Your NI and tax contributions are not sufficient to cover all the bills (unless you are in the top 1% of earners). At best they will cover a very minimum level of care. And remember that the NI/Tax that they paid covered the bills at the time - it is our NI/Tax which is covering the bills now. Our childre.n (and grand-children) will be paying our bills through their NI/Tax
The rich have always passed money down the generations, mainly in the form of land. Until recently the number of people affected by IHT was tiny. It has increased, mainly because the IHT threshold has not risen in the same pace as house inflation in the SE of the UK.
You can argue all you want about IHT - but it is not going to vanish - look at the amount that HMRC receive from it - which is paid generally by the rich.
Even now the majority of people are still not impacted with IHT, especially where it is two people leaving their assets. For those people who are going to have more, it is their decision about what they want to do with it after they die, not the next generation. As such they need to make sure that any tax planning is done in plenty of time.
(Just been through all of this - my In-Laws passed away - 10 years apart - and we spent the best part of a year working through their tax planning and sorting it out with HMRC. The cost of the legal team was more than offset with the saving that they made. Even though me and my better half are only in out 50's we have already done out tax planning for our deaths as the savings can be passed down generations).
@olddog - IMO we pay more than enough NI to cover the care of the elderly. Too much of the welfare budget is wasted elsewhere.
@ransos - there are countries where property taxes are deductible against income tax. In any case council "tax" is a charge for specific local services.
I'm going to follow the example of our great leader, "call me dave" Cameron when it comes to inheritance tax.
Fiddle it/scam it/fraud/not pay it.
@olddog - IMO we pay more than enough NI to cover the care of the elderly. Too much of the welfare budget is wasted elsewhere
This may or may not be true and is a different argument. But the reality is that elderly care is means tested - so avoiding this means that everyone else is paying.
BTW NI is a red herring - it is nowhere near enough to cover what it was first introduced for - pensions and healthcare. UK tax (apart from council tax) is not hypothecated - all tax goes into one central pot from which is spent. Govts occasionally make out such and such a tax rise is linked to an initiative, but it isn't the case.
NI is just a different way of structuring one element of income tax
NI is just a different way of structuring one element of income tax
Yes agreed. The Tories have once more been kicking around the idea of abolishing it. The problem is that everyone will realise the basic rate of tax is closer to 35% than 25%
Fiddle it/scam it/fraud/not pay it.
Cameron senior/junior did none of the first three. He did not pay it as it was not due, he legitimately and legally structured around it. I have no intention of paying it, I will structure around it (already have quite a bit of planning in place re life insurance etc). That option is available to me and I am very much aware of the tax. It should be abolished for the reason I gave above as many are not or do not have the wherewithal to avoid it.
It should be abolished for the reason I gave above as many are not or do not have the wherewithal to avoid it.
We should only have taxes that everyone can avoid? Sounds good.
"I'm going to follow the example of our great leader, "call me dave" Cameron when it comes to inheritance tax.
Fiddle it/scam it/fraud/not pay it."
interesting, explain.
TBH its the sign of a bad tax that encourages ordinary people to avoid it. Tax is as much about social engineering as it is about revenue raising and I think the point of IHT has been lost - particularly as it is so easy to structure so it doesn't fall due,
Maybe just abolish IHT and charge a higher annual property tax to cover the shortfall - that may actually have a beneficial effect of taking some of the heat out of house price inflation.
[i]I detest IHT. The real crime is it's paid by the "small people". The wealthy can easily and legally avoid it and no amount of law changes and nashing of teeth is going to change that.[/i]
The OP house is worth £700k, that ain't small change. Worth spending a bit of cash to get decent legal advice.
The problem with abolishing inheritance tax completely, at this particular time,or any time recently, lies in the seriously wonky economy we now have. Where house price rises (in the South East) are used to hide the fact theres no economic growth.
So, we find out today that London properties have increased by 25% in the last year. So if you stand to inherit a London property then you're effectively 'earning' 25% returns PA. So the rich buy them purely as investments, and then pass them to their offspring.
Anyone get a 25% pay rise last year? No. Me neither. So we have yet another symptom of a lop-sided and unsustainable economic model, year on year, increasingly inequality massively, with the children of the rich benefitting enormously for doing absolutely nowt other than being the children of the rich.
The fact that they don't want to pay any tax on their good fortune (for that is all it is - they just got lucky by birth. Hardly meritocratic is it?) is pretty much par for the course.
Inheritance tax might appear to be unfair in a differently balanced economy, but in the present bonkers environment its one of the few things keeping rampantly increasing inequality at bay
We're just wading through the the inheritance tax affairs of my Mum who died in December (Dad died 6 years before that) - I say 'we', in fact it's my BIL who is an accountant and ex-company chairman.
The bottom line tends to be don't mess with the inland revenue.
If you use any maginally slightly dodgy methods to try and reduce the IT they WILL spot it and will then start going through the rest of the estate with a fine tooth comb.
This may not sounds so bad but they WILL find everything and the process can delay probate being granted for a very long time (we're talking years here). During this time all the bank accounts are frozen and you'll not be able sell parts of the state (such as a house) whether you want to or not. This can cause massive problems as mortgages, bills, etc. still have to be paid during this time.
So the moral is.... try it at your own risk.
We're up to 7 months so far and they're yet to start querying values of everything.
IHT would be a near-perfect tax were it not for all the loopholes. Dead people don't need money, and their beneficiaries are getting a free gift that they have no moral claim on anyway, so have no reasonable grounds for complaint if the gift is a bit less than they had wanted. The idea that the dead person should have the right to do what they want with all of their money, *after* they are dead, is idiotic. They are dead. If it mattered so much, they should have done it while they were alive.
Captain,explain how the government have a moral right to the money.
I'm pretty sure this is what a will is.If it mattered so much, they should have done it while they were alive.
Do I have no moral claim on the belongings that were once my mothers? Thanks for letting me know.their beneficiaries are getting a free gift that they have no moral claim on anyway
In what way does it seem fair that someone works and earns money, then pays tax on that money, only to be taxed again on that money for no other reason other than the fact that they've died?
I detest IHT. The real crime is it's paid by the "small people". The wealthy can easily and legally avoid it and no amount of law changes and nashing of teeth is going to change that.
^ This
This what?
"This is bollocks" maybe?
IHT is not paid by the "small people". It's paid by the well off and the fortunate. In 2011/12 only 3% of deaths triggered any inhertiance tax to be paid.
You have to be fairly wealthy to pay inhertiance tax.
If you really want to gift your estate to your ofspring do it when it makes a difference, spend money on them when they are young, give them a chance to create their own money.
Given that a lot of estates will mainly consist of property, presumably bought some time ago with a mortgage, tax relief will have been given on the payments up to the mid 70's after that on the interest payments.
It's only recent years that it was abolished.
So maybe the wealth was accrued tax free after all in a lot of cases? 🙂
Of course we all hate paying tax, but some of us view it as necessary for society to function. I'd much rather that taxes are levied on the unearned windfalls that people get through luck of having parents who jumped on the property ladder at the right time, than on earnings of people who aim to better themselves through work. The torygraph-esque bleatings of 50-somethings drooling at the prospect of a massive payout make me sick. And I say that as someone who expects to benefit from a large windfall of this nature in the next decade(ish), unless it's eaten up by the astronomical costs of care, so it's hardly a matter of jealousy.
I'd much rather that taxes are levied on the unearned windfalls that people get through luck of having parents who jumped on the property ladder at the right time, than on earnings of people who aim to better themselves through work.
But it doesn't work like that does it? My Mum certainly made a bit of money on property (first house they bought in 1958 cost about £2k), but at the age of 55 she packed in her NHS job and started her own business employing in excess of 20 people at any one time until she retired at 76.
She made three times from the business than she did from rising house prices (and paid plenty of tax on those earnings) yet she's paying tax on it all over again.
She made three times from the business than she did from rising house prices (and paid plenty of tax on those earnings) yet she's paying tax on it all over again.
In the context of Inheritance Tax she's not paying anything though is she. You might, but she won't.
Crikey ... 😯
This inheritance tax who started it? 🙄
Get her to transfer as a gift, (Not sure of the exact process) it to you. So long as she lives for 7 years there is no tax. My Mom did it for me years ago. She still lives in it. I think she has to pay us some sort of nominal rent as part of it but we mostly ignore that.
Would be very wary of following that advice especially the last bit. Unless you want a nasty shock.
Hard earned money by parents, grandparent etc being taxed, more taxed and further taxed.
The system is truly parasitic ... 😯
I wonder if this will happen in Scotland once they gained independence.
I'm sure it won't happen when UKIP are in power.
You might, but she won't.
Seeing as the tax is paid from the deceased persons estate, you could argue that they/she is.
You could argue that
Seeing as the tax is paid from the deceased persons estate, you could argue that they/she is.
You could but it'd be a very very weak argument. You could also argue that the best way for her to avoid the tax would be to spend the money until it less than the threshold, or give it to charity.
Hard earned money by parents, grandparent etc being taxed, more taxed and further taxed.The system is truly parasitic .
Does that not depend what the tax is then spent on?
Do you think all tax and subsequent spending by government is parasitic?
Do you not believe in society helping the poorer by taxing the richer?
I reckon VAT is a far more "parasitic" tax than inheritance tax.
[i]I find it amazing that people build up an pot of money for their retirement, then want to give it to their children and expect the state to pick any care bills. You save money for YOUR rainy day and now it is raining. [/i]
This
We live in a country where we help the poorer by taxing the richer, in fact one of the most generous in that regard. Its a matter of degree. I am firmly of the view that IHT is a scandalous tax. Some here seem to think that profits from property as somehow not earnt, this is not my view, most of our parents and those before them worked very hard to be able to buy a property making many sacrifices to do so. They had the foresight to buy.
John Major talked about abolishing it and it's time we do the same. I posted that it affects the "small people" as the really wealthy, the top 1% if you like to use that banner, don't pay it. They arrange their affairs to bypass the tax. It's that next level who pay unwittingly.
@gonefishin, you are quite right the easiest way to avoid IHT is to "spend" the money.
@IHN, we have until recently looked after the sick and elderly without a means test. I am firmly of the view that a lifetime of tax payments entitle you to free healthcare in your old age.
@ransos - there are countries where property taxes are deductible against income tax. In any case council "tax" is a charge for specific local services.
No, council tax pays for about 1/3 of local services, with the rest coming from central taxation. That includes IHT.
Some here seem to think that profits from property as somehow not earnt, this is not my view,
Whats your view on the profit from inherited property? Is that 'earned' then?
Because thats the issue here. The profits from property ownership/speculation are now so ridiculously out of kilter with the 'real' economy, and particularly wage rises, standards of living etc, that those that possess capital are now enjoying ludicrous levels of return (25% PA in London), presently, in a property market/bubble that is being placed out of reach of everyone but an ever smaller minority of people. Concentrating ownership in the hands of those who already possessed capital. Thus Turbo-charging the already huge disparity in wealth and incomes between those at the top, and the rest of us.
The abolition of inheritance tax would compound this problem enormously, and fuel a further massive increase in our already economically unbalanced society.
I am firmly of the view that a lifetime of tax payments entitle you to free healthcare in your old age.
And I'm of the opinion that the welfare state is to help those that need it, not a free for all.
IHT is only paid by a small percentage of estates (3%?) And I'm pretty those aren't the poor underclasses. It'd be good to close a few of the loopholes the wealthy exploit.
we have until recently looked after the sick and elderly without a means test. I am firmly of the view that a lifetime of tax payments entitle you to free healthcare in your old age.
Yes but it wasn't anticipated that people would live far longer.
I posted that it affects the "small people" as the really wealthy, the top 1% if you like to use that banner, don't pay it. They arrange their affairs to bypass the tax. It's that next level who pay unwittingly.
The top 3% are not the small people, or anything like it.
IHT is only paid by a small percentage of estates (3%?) And I'm pretty those aren't the poor underclassmen. It'd be good to close a few of the loopholes the wealthy exploit.
If that's the case then it would go some way to explaining why the DWP are hounding executors of estates that do not fall in this category claiming that money is owed. I reported on this very subject on here, ended up getting the local MP involved. Believe me, dealing with the DWP is incredibly stressful where they make accusations with nothing to back them up.
So those with estates worth over £325,000 are "small people"?
What do you call those who don't reach that threshold, ants?
Get her to transfer as a gift, (Not sure of the exact process) it to you. So long as she lives for 7 years there is no tax. My Mom did it for me years ago. She still lives in it. I think she has to pay us some sort of nominal rent as part of it but we mostly ignore that.Would be very wary of following that advice especially the last bit. Unless you want a nasty shock.
As I said before. I was abroad when it was all done and to be honest back then didn't really worry about it as it seemed a bit wrong to be anticipating the death of a loved one. My brother handled it all and he is a pretty straight bloke so I assume he took advice on it. I still don't care enough about it to get into it.
If I'm left some money it will be nice. I might be able to go out and buy that really nice bike or, more likely, Wifey will spend it on redoing the kitchen. 😀
jambalaya - MemberI am firmly of the view that a lifetime of tax payments entitle you to free healthcare in your old age.
What about those people who've 'structured' (brilliant btw) their affairs to pay the absolute minimum they can during their lifetime?
binners, once again, is talking sense. Am being completely hypocritical though as have recently inherited a very modest property with my bro.
I would say though that some folk will be 'dependent' on this due to the utter mess left by consecutive Governments where the population have seen their incomes fall and their standard of living accordingly.
