Budget Oct 24 Thread

Re the IHT on Pensions:  assuming someone passes after 75, the recipient(s) will, under current rules, pay their marginal rate on withdrawal.  If the entire pension is taxed upon inheritance, does that mean it just shifted all the taxation up front and the funds are then moved outside the pension wrapper?

Taxing the entire value up front AND keeping it inside the pension would result in double taxation.

So if the recipient were to leave a fund to grow it might yield higher tax returns as it’s drawn down later?  So, actually this could be a net reduction it tax receipts by this move.  Just changes cash flow to an earlier point in time for the government?

They’re having a consultation period to work out the details.

The trouble me with farms is the values are massively affected by how much a nicish house with a garden is worth in the area. Down here a 4 bed house with a large garden is £1mm on its own, so anything with significant land will be breaching hard into the iht, whereas the same size farm in the north is likely worth much less. I think the farmhouse might pass into the non-farm property up to 1mm bucket, but not sure how you assign value when everything is just bundled into one

Taxing the entire value up front AND keeping it inside the pension would result in double taxation.

Does it?

If you owned a company outright rather than via shares wrapped up in a pension then surely you would pay inheritance tax on the value of the company, but that doesn’t get you out of paying tax on future dividends or sale of the company?

The trouble me with farms is the values are massively affected by how much a nicish house with a garden is worth in the area. Down here a 4 bed house with a large garden is £1mm on its own, so anything with significant land will be breaching hard into the iht, whereas the same size farm in the north is likely worth much less. I think the farmhouse might pass into the non-farm property up to 1mm bucket, but not sure how you assign value when everything is just bundled into one

That depends on the farms ownership model. If the farm is owned as a company then the current farmer is the director. Kids can then be added to the board and buy shares at a nominal value. Farmer then resigns and sells shares at nominal value to kids. Company carries no inheritance as nothing to inherit.

If the farmer doesn’t own the land but rents it then the land value is irrelevant. I suspect this get quite complicated quite quickly

The trouble me with farms is the values are massively affected by how much a nicish house with a garden is worth in the area. Down here a 4 bed house with a large garden is £1mm on its own, so anything with significant land will be breaching hard into the iht, whereas the same size farm in the north is likely worth much less. I think the farmhouse might pass into the non-farm property up to 1mm bucket, but not sure how you assign value when everything is just bundled into one

The other complication is that a farm on the outskirts of Slough could speculatively be worth hundreds of millions because at some point in 10/50/100 years it’ll be a housing estate and an acre that was objectively worth £9k is now £3million. A farm on the outskirts of Skipton is just £9k/acre.

I’m torn on it, on the one hand it makes life difficult for farming kids who want to be farmers. On the other hand why do they get a multimillion pound leg-up in the industry compared to the kid in the village who’s dad was a contractor or tenant farmer.

Farmer then resigns and sells shares at nominal value to kids.

But doesn’t this attract capital gains tax?

It was a giant loophole though. People gaining their wealth outside farming, and then in their retirement years buying farms, playing at running them (or letting others pay them for the privilege of running them), ready to pass on the land to their adult and already wealthy kids as a nice big tax free inheritance.

And right on queue, just to prove your point,Jeremy clarkson and Kirsty Allsop are all over the press complaining about this tax avoidance trick disappearing. I can’t think why they would be so concerned as farming families for many generations.

Clarkson is apparently on record saying he bought his farm specifically because it was IHT free. He has subsequently raised the profile of farming through his show so presumably knows at least a few family run farms.

Personally having a farm, and knowing many farmers. The easy way out – and from the farmers sons i know of – the farmer (dad) needs to hand over the reins much earlier so they survive the 7 year period re IHT (or proactive effective tax planning actively like using existing Trust setups).

I think the farmer sons i know will be well happy to have the business earlier, than having dad hanging onto the last minute when we all know it will go to the next generation……..

Clarkson is apparently on record saying he bought his farm specifically because it was IHT free.

Well, there you go.

He has subsequently raised the profile of farming through his show so presumably knows at least a few family run farms.

Absolutely. He’s done a lot to reduce our collective ignorance about how tough farming is. But farms that have always been in the family can still be kept in the family, the IHT changes don’t change that. And where do tenant farmers with a family tradition fit into this? Loopholes for landowners need shutting down. Actual farmers need more help… and that goes well beyond IHT rules… and applies whether they are fortunate enough to own all the land they farm or not. It means stronger regulations on supermarket and other large purchasers for a start. It means support for those that add value to their produce through small scale food processing (blessed are the cheesemakers) and a trading landscape where they can flourish against the bigger international producers. Target help at the smaller farms producing a quality product that we all need and can appreciate. Don’t let farms become nothing more than an inheritance tax dodge for those that can afford to buy land.

A traditional British farmer yesterday…

Unfortunately, it does appear that, like many others, RR is playing a ‘Those who have worked a bit to ‘get ahead’ are bad.

Take private school costs as an example.  A colleague at work, due to issues at the state school he is in the catchment area for, decided – for the future good of his only child – to sacrifice to allow him to send his child to a private school.

This chap pays a mortgage and uses public transport then walks to get to and from work each day.  He is not dripping with cash in the slightest.

However, he is now bricking it as the cost to keep his only child in school is now notably more expensive.

Unfortunately, Labour needed to be whiter than white in comparison to the previous bunch of clowns and chancers and whilst the magnitude of being a bit grubby is not on the same scale, it does exist.

I’d be very interested in whether declaration of interests of all our politicians – including shares owned and in which companies – should be widened.

It means support for those that add value to their produce through small scale food processing (blessed are the cheesemakers) and a trading landscape where they can flourish against the bigger international producers. Target help at the smaller farms producing a quality product that we all need and can appreciate.

While I agree and that all sounds nice in a idyllic pastoral country way (whey?) .  By the same token everyone else needs support too. There’s little point protecting farming kids inheritance so they can go onto produce artisan sourdough and cheese if the rest of the country stagnates and can only afford the cheapest sliced white and that rubbery plastic that masquerades for cheese in the supermarket value section.

Are farmers now the new fishermen? In that right wing people suddenly pretend to care about them when using them as a political football to further their own agenda’s?

“‘Those who have worked a bit to ‘get ahead’ ”  is one of those phrases that makes me dis-proportionally cross.

Kinda presupposes that anyone using a say a foodbank has really only got themselves to blame.

I’ll tell you what @benz

When carehome workers and nurses can afford a mortgage let alone ‘a mortgage and then scrimping a bit’ to get their kids to private school, then I’ll start to worry about your colleague.

Take private school costs as an example. A colleague at work, due to issues at the state school he is in the catchment area for, decided – for the future good of his only child – to sacrifice to allow him to send his child to a private school.

This is very emotive language, and you are doing your best to make a strong case for the good of this one child.

However, I believe the government should be looking at the bigger picture, and instead providing sufficient money such that the state school this child would ordinarily go to is able to provide a good education for everyone relevant, this child included. I appreciate this doesn’t do any good in this individual case, as of course even if all the money was provided yesterday afternoon it takes time for these things to adjust.

A rising tide or some such.

Take private school costs as an example.  A colleague at work, due to issues at the state school he is in the catchment area for, decided – for the future good of his only child – to sacrifice to allow him to send his child to a private school.

This chap pays a mortgage and uses public transport then walks to get to and from work each day.  He is not dripping with cash in the slightest.

Ah bless they have to scrimp a bit to spend several thousand pounds to send their precious to a school to **** them up?

Sorry if you can afford £10,000/year to send a child to private school even if it involves scrimping & saving you’re doing better than OK.

Does it?

If you owned a company outright rather than via shares wrapped up in a pension then surely you would pay inheritance tax on the value of the company, but that doesn’t get you out of paying tax on future dividends or sale of the company?

The sale of the company would only attract CGT on the gain since it came into your ownership, ie when it was inherited.  So, the inherited value is effectively exempt from further taxation.  The same should go for pensions.  Exempt the value of the asset that’s had tax paid on it.  That could be achieved by over complex protection rules in the pensions system or simply remove the assets from within the pension wrapper and then CGT kicks in for future gains.  There’s already precedent for this on pension inheritance where the deceased was <75.

However, he is now bricking it as the cost to keep his only child in school is now notably more expensive.

Anyone who can afford to put a child through private school (without aid) is cirtainly not poor. There will always be a median line where tax rises affect some and not others, but the private schools thing is going to get little sympathy.

@Winston – that was me interpreting the language of certain politicians who, TBH, seem to want to create yet another culture of division/anger/hatred/select whatever word you deem appropriate – to divide and conquer – using perceived ‘wealth’  rather than immigration.  Likely using such to deflect from their own relative wealth and privilege (unlike RR, neither I nor my colleague have a property from which we obtain rental income from).   We are both ‘working people’.

It seems to be working.

Anyone in their right mind would not suggest ‘blame’ when it comes to folks having to use foodbanks and other, generally volunteer and donation supported supports rather than government or authority support for such.  Flip-side is trying to vilify or blame those who do not.

Nurses?  My grandmother and mother were and my sister and nieces are.  All have – eventually – got a mortgage.

However, he is now bricking it as the cost to keep his only child in school is now notably more expensive.

He’s paying to give his child an advantage over the vast majority of children and thus entrenching inequality

So he can pay tax on that

If he doesn’t want to, then he can always use the same education system as the other 95% of the population

FFS .

Seems some on here want to revel in another person’s current challenge off the back of the budget.

Why?

Ah bless they have to scrimp a bit to spend several thousand pounds to send their precious to a school to **** them up?

Sorry if you can afford £10,000/year to send a child to private school even if it involves scrimping & saving you’re doing better than OK.

Poor you having such a chip on your shoulder.  Bet you’re a Labour voter too.

Keeping fuel duty as is will cost £20bn

I doubted this figure when I saw it, if it was that much, just add 15 pence to each litre, and the deficit will be written off in a few years.
Unfortunately, it wont be, as fuel duty brings in, annually, around £25bn, with the tax currently at around 53p/l, so a 5p increase will bring in around £2.25bn. I agree with the sentiment, and I’m surprised Labour havent done this, but they clearly think FU bus users, we’re not that bothered about you, but we’ll keep other road users happy by not increasing their fuel tax.

Seems some on here want to revel in another person’s current challenge off the back of the budget.

Why?

Some of the comments could be better worded, but your colleague still has options which many could only dream of.

Even if your colleagues child had to go back to a state school the money saved could be spent on many hours of private tuition.

Unfortunately, whilst funding is undoubtedly an issue, the other issue is a broader societal one – where you have the minority who do not adhere to or respect what most of us would identify as good community or society behaviours and believe normal law and order does not apply to them.

Unfortunately, the minority then consume so much resources, the majority are neglected.

Unfortunately, whilst funding is undoubtedly an issue, the other issue is a broader societal one – where you have the minority who do not adhere to or respect what most of us would identify as good community or society behaviours and believe normal law and order does not apply to them.

To reduce it down, this is also a funding issue. Just a really long term one.

Seems some on here want to revel in another person’s current challenge off the back of the budget.

I’m struggling to see their challenge.

Either they’ve just become ~£10k/yr better off, or their kid is gaining a massive advantage in life but they’re paying tax on that.

Bet you’re a Labour voter too.

?

I know the forum has a pretty strict swear filter but you’ll need better insults than that.

Unfortunately, the minority then consume so much resources, the majority are neglected.

Hang on, so you think he should pay tax when he (the minority) has accumulated those resources so that the majority aren’t neglected?

Can we stop with this utter bull**** that somehow the majority are land owning with kids in private school, driving thirsty cars on long commutes to jobs that pay a significant amount of higher rate tax?

Seems some on here want to revel in another person’s current challenge off the back of the budget.

Why?

Who’s revelling in anything. People are merely pointing out that to be able to afford to privately educate your children puts you in an income bracket with a very small, privileged section of the population

And that’s before you get into the entrenched inequality enabled by private education and ruthlessly exploited by said small, privileged section of society. You could also argue that the state education system would be considerably better if the top 5% of earners had to use it instead of using their wealth to opt out of it

So you shouldn’t be surprised when ‘boo boo, poor me’ about paying tax on privilege elicits the worlds smallest violin

so why should the rest of us pay more tax so they’ll travel for free?

Because more people taking buses means reduced city centre congestion, reduced emissions, reduced noise, more bike and pedestrian friendly areas, and an understanding that getting on a bus isn’t seen as a failure but a perfectly normal option for travel.

Dan Niedel has an interesting thread on Twitter regarding the IHT tax on farms. It may not affect as many as some of the more strident voices are suggesting

It may not affect as many as some of the more strident voices are suggesting

I am shocked. Just like everything else then (see also ULEZ, Caz etc. etc.)

However, he is now bricking it as the cost to keep his only child in school is now notably more expensive.

There will always be people who make choice on the fringes of affordability suddenly impacted by a change of circumstances.

People are merely pointing out that to be able to afford to privately educate your children puts you in an income bracket with a very small, privileged section of the population

He did say he scrimped and saved on everything else to try to afford it, not that he was on an over average salary moaning about the extra 20%.   Assuming he’s living a humble sacrificial life to trying to boost his child’s educational ability and doesn’t have a garage full of £5k mtb’, I don’t see an issue with his moral and financial dilemma, it could be seen as a rather noble one.

I’ve no problem with his choices, Noble or otherwise.

My issue is that the private education systems exemption from tax is essentially asking the rest of us to subsidise a system only available to a small minority which we all know entrenches inequality

I don’t see why we should. You want the advantages for your children that a private education gives them? Fine, but you pay tax on it like you would do on any other luxury item.

He did say he scrimped and saved on everything else to try to afford it, not that he was on an over average salary moaning about the extra 20%.   Assuming he’s living a humble sacrificial life to trying to boost his child’s educational ability and doesn’t have a garage full of £5k mtb’, I don’t see an issue with his moral and financial dilemma, it could be seen as a rather noble one.

It could be, remember Sunak’s parents were merely* a GP and pharmacist, they had to go without sky TV.

*sarcasm, that’s pretty well paid in the scheme of things.

Pretty sure that the vast majority of folk who take the bus can afford the (subsidised) cost, so why should the rest of us pay more tax so they’ll travel for free?

Hmm, in that vein, I’m surprised I’m still paying full taxes, as I’ve never spent a night in hospital, and only ever once attended A+E after falling off my bike and needing stitching up. Also, why am I paying for HS2? I’ll never use it.
And, to make you feel worse, I’ve just got my free Scottish bus pass, and I’m still working. Double winner.
Yes, it is irony.

My issue is that the private education systems exemption from tax is essentially asking the rest of us to subsidise a system only available to a small minority

How do we subsidise it?  Are we also subsidising financial services and insurance?

So he can pay tax on that

You could argue he already does by subsidising the state school system!

I don’t see why we should. You want the advantages for your children that a private education gives them? Fine. But pay tax on it like you do on any other luxury item.

I don’t disagree with this at all btw.

An interesting breakdown about the IHT will mean for the vast majority of farmers in this thread.

https://x.com/DanNeidle/status/1851956390480302403