Inheritance tax.

@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 – Member

I 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.

OI! Don’t you be coming on here accusing me of talking sense!!! I’ve got my reputation to think of!!! 😉

gonefishin – Member
So those with estates worth over £325,000 are “small people”?

I guess what he meant was small people in comparison to the people with multi million pound estates who don’t pay. A £325k estate certainly doesn’t make you a member of the gentry! Plenty of ordinary working class people with estates of that size in most of our citys and I’d guess all of the south east.

I’d be all in favour of a death tax if I had any confidence that it was universal.

And I’m of the opinion that the welfare state is to help those that need it, not a free for all.

This.

Guys – as soon as Probate is applied for, the DWP are automatically informed where they send out a ‘fishing’ letter claiming that they believe money is owed from the Estate. No details are given so that means no breakdown of any figures or why. It’s done purely to frighten people.

I invoked the formal complaints procedure with them, it is not acceptable to send accusatory letters with deadlines when they don’t hurry with replies. I’m pleased to say that I absolutely tore into them with a stinking letter cos I wasn’t prepared to accept their crap. In fact I even quoted them the Civil Service code of conduct and told them they’d breached it.

anagallis_arvensis – Member

Does that not depend what the tax is then spent on?

Nope. The money is gone so do as they like. If govt spend it wisely they get another term to govern. Simple.

Do you think all tax and subsequent spending by government is parasitic?

The govt collected the tax so spend as they will but then to tax more some else already taxed income is parasitic.

Do you not believe in society helping the poorer by taxing the richer?

If the people are supposed to be taxed then they are taxed. The govt can do with the tax whatever they want but to tax someone again because inherited the income/wealth whatever has nothing to do with helping poor but simply a penalty for accumulating wealth. That is parasitic.

I reckon VAT is a far more “parasitic” tax than inheritance tax.

Well, not exactly the same aren’t they? VAT only incurred when you engage in them while inheritance tax is to tax on something that is already taxed.

It’s all Henry VIII and his accountants’ fault …

🙄

Those in favour of IHT seem to focus on the “unearned” nature of it coming “mostly” from property gains. Also a view that it’s a tax on the recipients rather than the deceased. There are so many contradictions in this, if you want to tax property gains then tax property gains, for everyone (I cannot think of a country which does this btw). If IHT is such a legitimate tax then why not make the threshold zero instead of £350k. Why is it that IHT is not payable between husband and wife or not payable from parents to children if the asset is a farm but is payable if its cash or property ?

As note above I said “small people” and put it in quotes as IHT isn’t paid on multi-million pound estates its paid on much smaller ones where the people haven’t made plans (I used the word structured as that’s the commonly accepted term for tax planning arrangements). My ex MIL bought her council house and she was pretty close to paying IHT, just wrong that that is the case.

As for making society more equal comments above, really IHT makes no difference at all. The really rich don’t pay it, anyone who makes a plan won’t pay it. The whole concept of making society more fair by a confiscatory tax policy is flawed. You make society more fair by giving the poorer members opportunities to advance themselves and a support network (welfare) to protect those who really need it.

The really rich don’t pay it, anyone who makes a plan won’t pay it.

The really rich structure their entire financial affairs to reduce the tax that they pay – tax avoidance. For most of us, the cost of setting up the relevant systems to reduce our tax is simply not worth it.

You can argue that the level when you pay IHT is too low, except that the argument of a person who buys their council house having to pay IHT is wrong. The price of the house was below market price and then house price inflation has taken it up.

And finally please ignore the tax on tax argument. All government tax asset transfers. This can when paying wages, buying stuff, selling stuff. IHT is paid on an asset transfer. (Which is why in economic terms velocity of money is so important, faster == more tax! But I digress!)

The govt collected the tax so spend as they will but then to tax more some else already taxed income is parasitic.

No it isn’t. Inheritance is unearned income.

Seeing as the tax is paid from the deceased persons estate, you could argue that they/she is.

I agree. As the tax comes from the estate, which has a tax free proportion, it is essentially the person who created the estate that pays the tax.

I would change this though so that each person who inherits gets a proportion tax free so that the more people who inherit the less tax is paid. This seems far fairer to me where we can have only children inheriting all their parents’ money and becoming rich overnight compared to people in big families to whom the amount is less likely to be particularly significant. Kinda might help with equality too as encourages people to share the money about a bit.

My ex MIL bought her council house and she was pretty close to paying IHT, just wrong that that is the case

Why is that “wrong”. I’m going to go out on a limb and assume that she didn’t buy it at the market rate but with a massive discount (or subsidy if you like) so frankly in that case taxing it seems like the only fair thing to do. Additionally had she sold the house before she died she would have been able the spend the money on whatever she wanted without paying tax on the captial gain. Alternatively she could have left the entire estate to charity and her estate would have paid no tax whatsoever.

It would seem that those in favour of inheritance tax aren’t looking to receive a large inheritance then? Anybody who is, and will happily pay the tax because they think it’s right, is a liar.

To be fair you haven’t really done anything to deserve that money.

Are you more bothered about someone having to pay tax on their money so you receive less or having to one day pay tax on the money you leave?

I’m in the latter group I suppose but not assuming there’ll be enough left to pay tax on after I’ve supported myself/wife through my final years.

Its beyond me why some people think thy’ve got some god-given right to have the best of both worlds. But, depressingly, and somewhat predictably, its an attitude typified by the gilded Baby Boomer generation.

They bought assets (or ‘homes’ as they used to be known in the olden days) at affordable prices. They then watched them appreciate, and continue to appreciate at staggering rates, far above any consequent increase in wages etc.

They cling on to these assets, while enjoying comfortable retirements, while the rest of the population endure the biggest drop in incomes and living standards in history, all the while expecting the public purse (through taxing the working) to continue to pay for their pensions, healthcare, free bus passes, TV licences etc. And to add to that they now want to hand these assets over to their offspring without having to pay any tax.

The pensions system, as it was designed, didn’t envisage funding the longer lifestyles of the now retired. Yet that generation has not been asked to make a single sacrifice. Nothing. Its the young that have been handed the bill.

If some of this huge expenditure is clawed back through inheritance tax, then surely thats only a good thing in helping to balance the books as Dave and George keep telling us we have too

Its beyond me why some people think thy’ve got some god-given right to have the best of both worlds. But, depressingly, and somewhat predictably, its an attitude typified by the gilded Baby Boomer generation.

They bought assets (or ‘homes’ as they used to be known in the olden days) at affordable prices. They then watched them appreciate, and continue to appreciate at staggering rates, far above any consequent increase in wages etc.

They cling on to these assets, while enjoying comfortable retirements, while the rest of the population endure the biggest drop in incomes and living standards in history, all the while expecting the public purse (through taxing the working) to continue to pay for their pensions, healthcare, free bus passes, TV licences etc. And to add to that they now want to hand these assets over to their offspring without having to pay any tax.

The pensions system, as it was designed, didn’t envisage funding the longer lifestyles of the now retired. Yet that generation has not been asked to make a single sacrifice. Nothing. Its the young that have been handed the bill.

If some of this huge expenditure is clawed back through inheritance tax, then surely thats only a good thing in helping to balance the books as Dave and George keep telling us we have too

Nail on the head.

It would seem that those in favour of inheritance tax aren’t looking to receive a large inheritance then? Anybody who is, and will happily pay the tax because they think it’s right, is a liar.

There’s a reasonable chance that my parents’ and parents-in-law’s estates would be subject to IHT. We shall be making no special arrangements to avoid paying it. Whilst I couldn’t claim to enjoy paying tax, I don’t consider it to be unfair, and if you’re subject to IHT then that means you can afford it.

Binners, you should be a politician spouting that bollocks. Do you not think that those with multiple properties worked hard and made sacrifices to be able to buy them? There has never been such a thing as affordable homes for the ordinary working man, or else everyone would have a few.

Anyone who has done this will have their own private pensions, will use private healthcare when need be and probably wouldn’t be seen dead on public transport either.

I’m going to stand behind Binners pump my fist in the air and shout “Hell yeah”

🙂 I’m just bitter, as I’ve seen my family pay large six figure sums in IHT.

Edit – I should add that was done with their own money to save selling what they’d inherited.

I’m just bitter, as I’ve seen my family pay large six figure sums in IHT.

Which means you’ve just received a very large inheritance, something not enjoyed by 97% of the population.

So what are you bitter about?

Binners, you should be a politician spouting that bollocks.

No politician would dare to spout that particular load of bollocks! They’d upset the gilded ones, who ALL go out and vote, to maintain the status quo, which consistently prioritises their interests

Ransos, I was saying it partially tongue in cheek. Although, what made things complicated in my family’s case is that there was a business involved that’s been through four generations. Any properties that had been bought/built in the last 40 years had money spent on them and/or were worked on by more than the deceased…none of that was taken into account!
Banks accounts were frozen too, so that made things worse for the normal running of the business. Most of the problems arose from my Grandfather still being a partner in the business when he died at 78. If he’d retired at a normally expected age and handed everything over, most of the tax wouldn’t have been payable…so not really the fault of IHT.

Ransos, I was saying it partially tongue in cheek. Although, what made things complicated in my family’s case is that there was a business involved that’s been through four generations. Any properties that had been bought/built in the last 40 years had money spent on them and/or were worked on by more than the deceased…none of that was taken into account!
Banks accounts were frozen too, so that made things worse for the normal running of the business. Most of the problems arose from my Grandfather still being a partner in the business when he died at 78. If he’d retired at a normally expected age and handed everything over, most of the tax wouldn’t have been payable…so not really the fault of IHT.

I’ve no doubt that the government find all sorts of ways of making it more difficult than it needs to be. But for those complaining about paying some tax on unearned income, I want to give them one of these:

@binners – relax you might blow a fuse, it’s Friday the weekend is nearly here and the TdF is coming 😉

68% of the population own their own property, it’s the majority we are talking about here. The argument is that people have paid tax over their entire lifetime. This marx-ist stuff about earned wages vs un-earned asset value increases is misplaced.

If you have millions you don’t pay this tax. I have life insurance policies written into trusts so they don’t attract IHT, absolutely standard stuff. It’s daft.

@dh – I am sure your Grandad would have been mortified (no pun intended) to discover the IHT implications, I find it hard to square the fact that he had to pay where-as others more focused on tax planning do not.

@binners – relax you might blow a fuse, it’s Friday the weekend is nearly here and the TdF is coming

Off over to that that Yaaaaaaaaaaaaaaaarkshire, to soak up the atmosphere with a few ales, in approximately 1 hour and 41 minutes.fella. Not that I’ve been counting down the minutes since this morning, or anything 😀

Ransos, what I failed to explain is that my dad still runs that business. The assets weren’t unearned income, my dad had spent lots on them too. After already paying higher rate tax, then high tax again on the rent from those properties, it stinks to have to shell out a few hundred grand on top of that.

Anyway, no one here can complain anymore. Nothing had to be sold off, and if the time comes to sell up, it’ll be for more than a few million. So, no violin needed. 🙂

Ransos, what I failed to explain is that my dad still runs that business. The assets weren’t unearned income, my dad had spent lots on them too. After already paying higher rate tax, then high tax again on the rent from those properties, it stinks to have to shell out a few hundred grand on top of that.

In other words, rich people had to pay more tax.

Jambalaya, you’re right, he would have. I just don’t think he wanted to retire, as he never saw himself as old. We got off lightly to be honest.

In other words, rich people had to pay more tax.

@ransos – rich is an objective term. The UK is a rich country, rich enough to pay welfare to the less fortunate members of society. I suppose @d45’s granddad was rich to some, perhaps many. So is Sir Phillip Green. I doubt you’ll see much IHT paid when he passes away, he swerved £300m of income tax on a £1 billion dividend from TopShop so IHT won’t trouble him.

My argument is that the really rich (my definition) don’t pay this tax and you’ll never change that, so its pointless.

@d45 chapeau to him for that.