Sorting out my parents wills/estates etc. this week, they're nowhere need the inheritance thresholds but just wondering what happens when the Lord of the Manor pops his clogs - do the family have to pay inheritance tax on the £5m stately pile?
Don't they agree to let peasants in to look round the garden for a couple of days a year, or something instead ?
sell a painting. Carry on.
They don't play by the same rules as the rest of us.
They would usually pass on the family wealth long before death, thus avoiding the bulk of inheritance tax.
My parents did the same a fair few years ago for myself and my brothers, I forget the exact legal details, and I think since thresholds have risen, and with property prices falling the figure would be nowhere near the current threshold.
A friend from university is the son of a Lincolnshire farming family (though he isn't a farmer). He and his brother were recently gifted the £64m business between them by their grandparents - it's all estate planning, as the rules mean he can't do anything with it, other than allow his parents to carry on farming.
And because they're wealthy (rather naff to say "rich"), no-one feels the need to break this cycle and run off with their share.
Easy rich people like major companies are tax exempt thanks to prudent financial management .
"only poor people pay taxes."
Isn't it something like the money/assets have to be passed on 10 years before death to avoid inheritance tax?
7 years iirc.
they will have spent loads to keep it in the family, usually done via trusts?
A family friend , ex-tax inspector died recently, leaving his family assets over the thresh-hold, yet he didn't do anything to protect them from the 40% tax bill they'll face. I was very surprised to hear...
Another bunch of [s]greedy barstewards[/s] friends, got their mum to move out of the long term family home (30years?), so they could sell it & their hand on the cash. Unfortunately she's died, well before the 7 years is up, so they will need to pay death duties on it.
[their not really that bad ppl, just looking in on situation it didn't seem 'nice']
All this though is irrelevant, why the **** do you have to pay death duties in the 1st place on money some-one earned legally, having already paid tax on it...
All this though is irrelevant, why the **** do you have to pay death duties in the 1st place on money some-one earned legally, having already paid tax on it...
There is no logic to any taxation - it is because it is.
[url= http://en.wikipedia.org/wiki/Inheritance_Tax_(United_Kingdom) ]Wiki on Uk inheritance tax[/url]
Anything you pass on is a Potentially Exempt Transfer (PET) in IHT terms for 7 years.
As each of the 7 years pass since the transfer, the amount of IHT decreases until it reaches 0% after 7 years.
The tricky part is knowing that you still have 7 years to live.
I think you would still have to pay CGT on any gains made if you then sold the property though. For example, you are transferred a house worth £1m from an elderly relative. The relative manages to live for another 10 years, so not IHT liability. But if you sell the house for £1.5m, you pay CGT on the £0.5m increase in value. I think this is the case anyway...pretty sure HMRC look at the market value at the time of transfer, rather than assigning a value of £0, since that would leave you with a CGT bill on a taxable value of £1.5m, which would suck.
All this though is irrelevant, why the **** do you have to pay death duties in the 1st place on money some-one earned legally, having already paid tax on it...
+1.
One thing that instantly springs to mind is that whilst we're talking about it on a cycling forum, albeit one with a very wide breadth of collective knowledge, 'the rich' have already employed the best accountants and lawyers to look after all of this. They know well in advance how to avoid paying the those pesky taxes by exploiting every loophole they can.
I think also that a lot of their wealth is tied up in things that are difficult to put an absolute value upon, and end up having a notional value (often very low) to satisfy whoever. I also can't imagine that all of those landed gentry who in the nineties opened their houses and grounds to the great unwashed did it because they actually wanted us lot tramping around their property. My guess is that if their property is their business, when they die their business simply continues under new management (inherited???) by their family
Been to Aldi recently?
Notice the big Chelsea tractors in the carpark?
They are rich because they are very careful where they spend their money.
And when they have some savings, they employ an accountant to find legals ways to avoid paying tax on it.
All this though is irrelevant, why the **** do you have to pay death duties in the 1st place on money some-one earned legally, having already paid tax on it...
To be fair, IHT is generally a tax on the rich. Whilst it may not seem logical or fair, most people DO NOT have to pay any IHT at all (or pay very little IHT).
What it does do, if it works correctly (which it never does), is tax people who inherit £millions. If they had earned £millions, the public would expect them to pay tax on it, if the government did away with IHT then the vast majority would be outraged at how families with £millions stashed away in property etc could just pass it on from generation to generation without paying much tax on it, whilst the rest of Britain "worked their backsides off" and had to pay 40% tax.
I see the argument from both sides, and appreciate the reasoning for each. It's double taxation, no doubt about it. But seriously, it does not affect very many people in the UK.
xiphon - Member
Been to Aldi recently?Notice the big Chelsea tractors in the carpark?
They are rich because they are very careful where they spend their money.
How true! Remember Princess Anne's wedding present to Charles and Dianna? How may sky dishes do you see on an estate? Suburu or Chelsea tractor etc.....?
Incidentally, I recall a great test case when sitting tax law exams years ago.
Can't recall the citation, but it involved an old man playing a game of cards with his friend/son and betting his entire (and substantial) estate on his hand. He lost, and claimed that he had lost his estate whilst gambling, and since gambling losses/gains are not subject to taxation there was no tax liability.
The tax authority at that time challenged it and unsurprisingly the court decided that the old guy was evading tax.
Good idea though 🙂
crankboy - Member
Easy rich people like major companies are tax exempt thanks to prudent financial management ."only poor people pay taxes."
You are Ken Livingstone and I claim my £5.
I like how you have asked this question on here 😉
"You are Ken Livingstone and I claim my £5. "
Leona Helmsley actually .
Isn't the standard answer:
"by screwing the working classes'? With the possible caveat, given the question "... even harder"?
no, David Hartnett, IIRCLeona Helmsley actually
My great great granddad was dead rich but gave it away so maybe I am not one to ask. Think one of the charities he started is worth +£300m.
Anyway here are some ways of keeping rich:
- Buy and then "Farm" a farm. If you "farm" a farm then you do not pay tax when you pass it on. This is what the person does who bought our farm. We actually still farm it but he is the "farmer" for Inheritance purposes.
- Environmental schemes. My sister works for Natural England and she was at one "famous" estate and they complained that they could not get money for an environmental scheme. Sorry you are already in one to avoid tax.
- Don't spend all your money.
- Be pals with the Tories I am sure helps.
There is nothing wrong with inheritance tax in my opinion. Why should people be able to be vastly wealthy just because their ancestors stole land off the peasants for example? The person inheriting has done sweet FA to earn the money. I would not mind sending all my money on educating my children and giving them a good start in life but then it is up to them to get off their backsides and make something of their lives.
Why should people be able to be vastly wealthy just because their ancestors stole land off the peasants for example?
Maybe, but why should I not be able to pass on the money I worked bloody hard to get and paid tax on to whoever I see fit?
Once you have a few £m tax is pretty much optional - there are so many loop holes and exceptions you can exploit if you're rich enough.
Thing about IHT is it hits the middle classes whose property has risen in value without them really thinking about it, and not having done proper tax planning like those a bit wealthier have.
Maybe, but why should I not be able to pass on the money I worked bloody hard to get and paid tax on to whoever I see fit?
But what if your just a lazy waster with a high self opinion, could we tax you then?
Thing about IHT is it hits the middle classes whose property has risen in value without them really thinking about it
So "free" money then? Being taxed on that doesn't seem unfair to me.
Taxation is a strange thing - we complain about IHT, since it taxes assets for which has been taxed already (potentially) but it only affects a small number of people each year.
On the other hand my income is taxed and when I spend it it I pay more tax (VAT). Again double taxation but no one seems to complain and it affects all of us.
IHT originally only affected the very, very wealthy - as our overall wealth (esp house prices) has grown and the cutoff level has not more people have been dragged into paying IHT. Some people seem to have the impression that as you get older the state should provide all benefits and allow you to leave your wealth to you successors. Personally I thought you were saving up for the rainy day and it is now very wet outside.
Buy and then "Farm" a farm. If you "farm" a farm then you do not pay tax when you pass it on. This is what the person does who bought our farm. We actually still farm it but he is the "farmer" for Inheritance purposes.
A stock broker friend of our family got into "hobby farming" in the 90's. He was basically taking advantage of the tax benefits which were applicable to "farming" buildings, putting together a nice little nest egg with all his surplus earnings...but the best part was, he was off-setting all of the "losses" his farm was making against his taxable income from employment! 🙂 Don't think he paid any tax for about 5 years until HMRC caught on to how widespread this issue was and set new guidelines for farming exemptions and the old Schedule D/E offsetting of losses.
Not nearly as many loopholes as there used to be.
Taxes are always unfair to the people paying them.
Interest on an investment is "free money"?
Al, you said
which hardly implies shrewd investment acumen. Most likely they viewed it as a home not a "property" though it can be hard to imagine with all the property programmes on TV.property has risen in value without them really thinking about it
And if it is purely an investment which they happened to live in, CGT of some form should be paid.
If you are paying inheritance tax you are part of the rich elite and can afford it 😉
more seriously though. Inheritance tax like many taxes started off to catch the exceedingly wealthy. What has happened, particularly with house price inflation, is that it now starts to catch ordinary, hard working and succesful preople who's house has gone up in value while they've owned it. Similar to what will happen with Vince's mansion tax, today million pound houses in Surrey, in about 20 years, three bedroom semis everywhere.
The way to stay rich is to hire an accountant. Or work.
OF course the family could just continue doing whatever it is that they did to get rich and continue to earn money. A lot of wealthy people are succesful people and the businesses they set up continue to run and make money after they die.
