Completely loaded? Want your kids to be even more loaded?

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  • Completely loaded? Want your kids to be even more loaded?
  • According to what the missus learned in her pensions Q&A session today, pension funds are exempt from inheritance tax if you croak before you’re 75 years old. If you croak after 75 then the beneficiary pays tax at their normal whateveritscalled rate.

    So if you’ve got stacks of money, and also earn stacks then just pump £40,000 a year into a pension pot and then leave it your your kids in your will.

    Just think, for every 100 quid you set aside, they’ll get every penny of it (IYCBY75)  Whereas if you’d taken it in your wage packet and then left it to them in your will (I’m talking here about properly rich people) then for each 100 notes they’d only have got 36 quid.

    It’s quite scary when you look into it how the rules in this country are so skewed towards keeping the establishment in the style to which they’ve become accustomed, rather than having a fair tax system

    hugo
    Member

    So you think that your should be able to work hard, save well, but then have to give the money to someone else instead of your children?

    Very motivational.

    Should be noted that the top 1% of earners pay 27% of income tax. I’m all for a progressive tax system but to then also say they shouldn’t be able to pass it on to their children out of “fairness” strikes me more as jealousy than anything that’s fair.

    Premier Icon tomhoward
    Subscriber

    Inheritance tax is 40% isn’t it? Over 325k. 36% if 10% of the estate goes to the charity of your choosing

    5thElefant
    Member

    A fair system would be when you choose what to spend your money on. Tax is theft.

    Premier Icon mikewsmith
    Subscriber

    Should be noted that the top 1% of earners pay 27% of income tax. I’m all for a progressive tax system but to then also say they shouldn’t be able to pass it on to their children out of “fairness” strikes me more as jealousy than anything that’s fair.

    And what is that as a percentage of their total income not just what they declare?

    The more you earn the better value good accountants are.

    OK I’ll spend mine on establishing a bunch of merry men to go around and carry out wealth redistribution

    bikebouy
    Member

    Offshore it, problem solv’ed.

    hugo
    Member

    And what is that as a percentage of their total income not just what they declare?

    The 27% figure suggests they’re paying quite a lot.

    Offshore it, problem solv’ed.

    That’s where mine is, but legit because I live in a zero tax country.

    Saying that, with ISAs, you’re totally eligible for the tax free investment on your wonga anyway. If you’re saving over 20k a year then that’s the point at which you’re taxed, but how many are.

    Premier Icon mikewsmith
    Subscriber

    The 27% figure suggests they’re paying quite a lot.

    A lot of what? A lot of money or a lot of their income? What is their overall tax rate?

    Your figure is provocative but not informative

    tdog
    Member

    Quite (third time’s a charm ay Mike 😉

    So you think that your should be able to work hard, save well, but then have to give the money to someone else instead of your children?

    But we’re not generally talking about people who got where they did by working hard and saving well.  Many of these people just get their money from family down the years.  And the amounts of money they’re earning are out of proportion to the good they’re doing for society.

    I think there should be similar rules for everyone.  If middle (clearly not the middle, but bear with me) rich people have to pay inheritance tax etc then people who are even more loaded than them should have to pay it

    Very motivational.

    I’ll not bother replying to this bit as it’s just bilge

    Should be noted that the top 1% of earners pay 27% of income tax. I’m all for a progressive tax system but to then also say they shouldn’t be able to pass it on to their children out of “fairness” strikes me more as jealousy than anything that’s fair.

    Trust me honey.  I’m not in the slightest jealous.  I’m sensible enough to realise how lucky I am from a financial pov.  I can see that there’s loads of people who aren’t well off and I find it so unfair that there are all these schemes which basically give people who already have load of money loads more.

    Two other examples:

    My work does a share save match whotsit thing.  If I pay £50 a month into sharesave then the company matches that.  Which is fine, but get this…. that £50 is tax free.

    Or I can do a different share save option which allows me to reserve shares at 20% off the market rate at a certain date.   I pile my spare money into that pot and at the end I can either buy the shares at that rate, or if they have fallen in value more than 20% then I have the option to get my money back.   Heads I win, tails I don’t lose. So basically the people with a wad of money left at the end of the month have these great options for making stacks more money.  The people on lower salaries don’t have £50 spare each month so these benefits are closed to them.

    Or the Investment planners.  Worried about Capital Gains Tax…… no problem.  They’ll manage your portfolio so that any time your portfolio looks to be appreciating by more than £11,000 they’ll sell some of it for you, mix it round a few other options for the minimum amount of time and then reinvest it back into the same shares.  Each year they’ll keep doing this for you.  Say at the the of 10 years your £100k portfolio has doubled then you’ll have paid **** all CGT.

    fifo
    Member

    So you think that your should be able to work hard, save well, but then have to give the money to someone else instead of your children?

    Yes. If you have enough money for this to be an issue, you probably have too much. You may think you’re benefiting the economy, but having heaps of cash locked up in assets and savings does bugger all for it. Try a spot of altruism and donate it to charity instead. Or, at the very least spend it whilst you’re alive so you do benefit the economy.

    If youre half as good a parent as you probably think you are, you’ll have educated your children well enough so they can make their own fortunes. They don’t need yours.

    @fifthirrelevant: I’m guessing with logic like that you were private schooled, and not very well 🙄

    Tomhoward:

    Inheritance tax is 40% isn’t it? Over 325k. 36% if 10% of the estate goes to the charity of your choosing

    Yup agreed (apart from the house exemption up to £1m). But I’m not sure what your point is.  ( I don’t mean that in a mean way, I genuinely don’t get the thrust of what you’re saying)

    The 27% figure suggests they’re paying quite a lot.

    No. It suggests they’re earning quite a lot.

    Premier Icon ransos
    Subscriber

    Tax is theft.

    Enjoying public services without paying for them is theft.

    Premier Icon njee20
    Subscriber

    But I’m not sure what your point is.  ( I don’t mean that in a mean way, I genuinely don’t get the thrust of what you’re saying)

    You said that ‘normal’ People would only get £36 of every £100 inherited. Where’s the 64% going?

    Premier Icon funkmasterp
    Subscriber

    I thought this thread was going to be about parents teaching their kids how to get really wasted.

    You said that ‘normal’ People would only get £36 of every £100 inherited

    Righto. Thanks. I didn’t actually say that; but what I did say wasn’t clear.

    When I said set aside, what I meant was from his earnings.(gross earnings)

    Option 1:

    Put 100 quid in pension pot. Pay no tax on it ( cos of course you don’t pay tax on contribs).  Build up a fat pot and give the whole lot to the kids

    Option2:

    Take that 100 in your wage packet. You pay 40% tax on it so get 60 quid left.

    Build up a fairly fat pot and leave it to your kids with the rest of your estate (as above, I’m talking about well off people here who are over the threshold)

    The estate pays IHT of  40% on that pot. Ie 24 quid on each of those 60s. Leaving him with 36 quid for each of the hundreds on dad’s gross salary

    Clear as mud

    😁

    wobbliscott
    Member

    “But we’re not generally talking about people who got where they did by working hard and saving well.  Many of these people just get their money from family down the years.  And the amounts of money they’re earning are out of proportion to the good they’re doing for society.”

    That’s b’locks. The age of the landed gentry is over. Most wealthy people are people who have made their own wealth. And to say they’re doing no good for society when the top 1% pay almost 30% of the tax bill and the top 5% pay something like 60%, and 40% of the adult population don’t pay any income tax at all either because they don’t work or don’t earn enough. And then the more wealthy like their luxury goods so pay alot of VAT too on their big telly’s, nice cars, clothes, holidays etc. and pay alot of stamp duty on their expensive homes. All This contributes to the government quaffers which pays for the NHS, national pensions, benefits system, police etc. So take the rich individuals out of it then how on earth are you going to fund these things?

    I thought this thread was going to be about parents teaching their kids how to get really wasted.

    Just what is it that you want to do?

    Premier Icon funkmasterp
    Subscriber

    I think Wobbliscott might be one of them.

    I thought this thread was going to be about parents teaching their kids how to get really wasted.

    Just what is it that you want to do?

    I wanna be free to do what I wanna do

    The age of the landed gentry is over. Most wealthy people are people who have made their own wealth

    Bollocks. That’s just what they want you to believe. Like the American Dream, it’s there to give hope to the masses, to let them believe that we live in a meritocracy rather than seeing the reality.

    [the wrote:

    Not true.

    1% of PAYE earners pay 28% of the income tax bill.. that’s not the same thing. income tax is only 25% of the total tax bill.

    https://fullfact.org/economy/do-top-1-earners-pay-28-tax-burden/

    Inheritance tax is fairest tax of them all. Most of the money hasn’t been worked for…. like property gains for instance. Lots of people have seen their property increase in price by 100k+ and paid no tax on the gains, whilst their earnings are taxed at 30-40%.

    That doesn’t sound fair to me.

    Inheritance tax should be 100% and tax on earnings should be 0%.

    TheDTs
    Member

    The age of the landed gentry is over. Most wealthy people are people who have made their own wealth

    Bollocks. That’s just what they want you to believe. Like the American Dream, it’s there to give hope to the masses, to let them believe that we live in a meritocracy rather than seeing the reality.

    Ermmm. Not according to the Times (Or are they “they”)

    Inheritance tax should be 100% and tax on earnings should be 0%.

    The only proviso I’d put on that would be that money can pass between spouses/partners i.e all assets can be jointly owned between a couple. But other than that I’m on board for this.

    Premier Icon jimdubleyou
    Subscriber

    Just a few years ago you were able to pay in up to £250000 a year…

    £40k was actually seen as quite punative.

    TheDTs
    Member

    So people would gift their fortune to the kids early and live in the family pile gratis and free…

    So people would gift their fortune to the kids early and live in the family pile gratis and free…

    Agreed, It’s more of a thought experiment. Tax dodging scum will always be tax dodging scum whatever the system.

    Premier Icon jimdubleyou
    Subscriber

    Tax dodging scum will always be tax dodging scum whatever the system.

    Yeah, all those pricks with their ISAs, lording it over the rest of us.

    Arseholes.

    Premier Icon jamj1974
    Subscriber

    I wanna be free to do what I wanna do

    “Okay baby let’s go”

    Premier Icon jamj1974
    Subscriber

    Tax is theft.

    Property is theft?

    Profit is theft?

    Or perhaps there’s a sensible middle way…?  Makes you think…

    doris5000
    Member

    Take that 100 in your wage packet. You pay 40% tax on it so get 60 quid left.

    ah <cough> er, yes, 40%.  We’re all higher-rate taxpayers round here, right guys?

    <backs slowly out of room>

    Premier Icon mikewsmith
    Subscriber

    Why do marxists only drink tea made with tea bags?

    Because Proper Tea is theft…

    Premier Icon mikewsmith
    Subscriber

    and on a more serious note the tax system should be fluid enough to respond to changes in society and deliver what is best for society, funding social care and refilling the pension pot would be a good use for inheritance tax, I’m also all for limited tax relief on things like pensions to a much lower rate beyond a threshold.

    For all those that worked hard and are “self made” remember the roads that move your goods, the system that educates your workers, the health system that got you into the world and will look after you and the stability and security of law and order cost too, without them it would be a lot harder to be comfortable or well off.

    poly
    Member

    Inheritance tax is fairest tax of them all. Most of the money hasn’t been worked for…. like property gains for instance. Lots of people have seen their property increase in price by 100k+ and paid no tax on the gains, whilst their earnings are taxed at 30-40%.

    That doesn’t sound fair to me.

    i agree, but you need rules to make it “fair” and as soon as you have rules people work the system.  So if I die today my wife should probably keep my (imaginary) wealth.  If we both die our (under 18) children should probably not be left destitute.

    A more sensible approach would be to remove the capital gains exemption for people’s primary residence.  A gain is a gain.  It would make much more sense to tax the seller than the buyer anyway.

    Inheritance tax should be 100% and tax on earnings should be 0%.

    So that encourages people to spend as much as possible early which makes them a burden on the state if the live too long.  With an aging population I don’t think your career in economics is going to work out.  Or as someone else says they game the system by gifting to their kids – that already happens. I

    kerley
    Member

    With 100% inheritance tax (mainly from property) you would see the obsession of owning houses drop, prices drop and everyone be better off during their lifetime due to lower rent and mortgages

    It is also better to look at what money people are taking from the system rather than what they are paying in tax.

    If person A takes £100,000 a year and person B takes £10,000 a year who cares what tax they are paying – person A is still taking a disproportionate amount of money.

    gonefishin
    Member

    And what is that as a percentage of their total income not just what they declare?

    The more you earn the better value good accountants are.

    OK I’ll spend mine on establishing a bunch of merry men to go around and carry out wealth redistribution

    I’m roughly in that top 1% so to answer your question my average direct tax rate (including NI) was around 42% of my total income.  That’s average, not marginal.  I’ve not done this years (2017/18) tax return yet.

    As for pension contributions, I don’t get to put 40k into my pension as that allowance gets tapered which results in a marginal tax rate of somewhere around 70%.

    Ro5ey
    Member

    Or you could see pensions being outside inheritance tax as an incentive for people to save more for their retirement

    I think we’d all agree that saving for your retirement is a good thing and ought to be encouraged ??

    5plusn8
    Member

    You can pay your kids bills tax free, so rent, credit card etc. Do that, then make them invest their wages and then you will have nothing left for them to inherit, they will have their own fund instead.

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