Inheritance Tax

It will be interesting what new vehicles the wealthy favour if whipping up the masses about taxes that will not affect the majority of estates does not lead to repeal of these onerous oppressive measures.

Measures that unjustly penalise the hard working who were planning on accidentally taking advantage of pensions, farms and business investments to pass on the fruits of their own hard work to their children, well after they've generously given almost all their assets to charity to benefit those who presumably don't work as hard as the wealthy.

After making trusts harder to use without incurring costs, it's looking like the only alternative that even the most patriotic might have may be migration to less unjust regimes while possibly leaving in place any investments that still give a decent return.

I had to pay it. That’s life. 🤷‍♀️

I think it's an entirely fair tax that allows people to pay for the services they have used once they are dead.

I think the threshold should be lowered so that almost everyone with the asset of a property pays it.

This would enable to us to actually build infrastructure and council houses so that all people can actually afford to live.

Avoiding inheritance tax is selfish and immoral and is the province of wealthy people who want other people to not only pay for the services they use, but also to be able to retain privilege and wealth within their family, never caring that others who actually have far less than them are actually having to pay for this.

The Government make the rules.

It's fine to use them to avoid a tax. We all do, every month, when we use the personal allowance to minimise our employment tax.

If the Government want to change the rules then they can and, if they do, we should all comply with them.

All taxes can be argued as being unfair but we have to fund our public sector services somehow. We would all have our own arguments as to which ones we would like to change but that power is in the hands of the ruling party.

What I do think is all of the rates should align so that it doesn't cost more in taxes to work than to sit on assets and make a gain or inherit them. And so it doesn't encourage jumping from one tax to another to avoid the higher rate.

Do you also not agree with VAT and council
tax then? As they are also examples of being taxed twice

This will drive behaviours.

Ideally I'd like to help DC as early in their adult lives as needed but still to keep most of my money/assets during my lifetime in case I need support later on.

I'm not wealthy by any means but I have a very modest property in London and together with pension this will push me over the limit. So I fully intend to give DC most of it as soon as they reach 18.
Then if I need to move on benefits or to have care it's going to be state funded. I'd rather go this way then to hand over 40% of my lifetime savings to the taxman.
And btw, I grew up in abject poverty, no generational wealth involved in my case.

Unintended consequences.

I could help you with this problem ;-)

Plenty of people aren’t married.

I hope all the sanctimonious on here never accept a gift of any money or assets whatsoever from their parents while they’re alive. Because it’s no different. Either an individual is capable of giving their assets away without the taxman being entitled to a slice of it or they’re not.

At least those who say I don’t care because it will never impact me are honest

Under the great number of circumstances inheritance tax is not payable below one million pounds.

It affects a very small percentage of the population.

As a PP stated most inheritance tax is due on un-earned income, normally housing..

If I dropped dead today my son would inherit a minimum 500k mainly from a house. All of that would be tax free. Even that sounds a bit crazy to me

The whole point of IHT free pension pots was to encourage people to save in pensions - IHT exemption was one of several advantages. It's what governments do! They bring in reliefs and exemptions and then cry "foul" when people actually use them!! IHT exempt pensions was never some kind of "loophole" or unforeseen consequence, it was deliberate policy/law! (As were reliefs/exemptions for businesses and farms!!)

But the changes will mean that (without tax planning strategies) that 4% will rise enormously in the future. Changes to farmers is just one aspect. There are also changes to business relief, but the real "biggie" is pensions coming into charge. Not only will people be paying IHT on their pensions (if total estate over the threshold), but lots of people will start to lose the extra £125k residence nil rate band too as it tapers away on estates over £2m.

I've just done the numbers for one of my clients. Before the Budget, they had a potential IHT bill of around £100k which they accepted as acceptable and weren't really bothered about doing much tax planning. Due to the business and pensions changes, they now face a bill more like half a million.

So, as a result of today's meeting, we're putting in place a plan to zeroise the £100k to nil, zilch, nada. Well done Rachel! Typical complete inability to understand the glaringly obvious "unforeseen" consequences. UK PLC will lose that £100k which our client was otherwise "willing" to pay. But when that jumps to £500k it changed their whole perception and they became willing to take evasive action to avoid it, via PETS, lifetime gifts, trusts and changes to their wills!

If you can legally bring your wealth down to below the threshold then do it.

@Ginmonkeyagain My point is that it will hammer descendants of those who die just before, or just after, retiring. And single parents (not widowers) especially.
In the normal run of things people can spend so won't be affected. But these cases will (in my opinion) unfairly be impacted.

It was a contributing factor to my partner getting a civil partnership but other than than that I'm not worried.
I have farmer family friends they started the process of turning their farms into businesses it will probably increase their annual tax burden but reduce inheritance tax. It's not something I'm overly concerned about.
My partner and I have had 5 grandparents die in the last few years and all bar 1 had estates well below the threshold. The 1 that had the highest estate passed it to his wife who's in full time residential care and by the time she passes there won't be a great deal left. My parents are highly unlikely the be above the threshold.

Also there will (hopefully) be many more prime ministers between now and people close to me passing away and the conditions are likely to change over the decades some for the positives probably some for the negative. I'm not going to get in a tizz about it

Mosr people will not be taxed on DC pension pots as most people will not be leaving them to their children- because they will have spent them to fund their retirement - as is intended.

Unless people are using DC pension pots as an IHT avoidance vehicle - surely not. 🤔

I will take every legal route possible to avoid IHT. It's my money, to give to my children. IHT should be nil to children as it is between spouse's. We spend our entire lives supporting our children. Why are we not entitled to support them when we die??

We are encouraged to save for retirement, save the state money by funding ourselves, paying for our own social care, paying for pensions..... But if we don't use that, by either dying, or indeed being too healthy in old age to need care, we are penalised for doing so.

The million pounds limit to cover home and private pension, isn't that huge in the SE. And no, we didn't all buy houses at tuppence, that was the previous generation.

@SuzieNine

If you google what is the most hated tax it will tell you it's IH. It doesn't mention anything about being 'most hated by the 4% of people it affects'.

Many, many people, whether affected or not think it's horrendously unfair. Myself included.

My parents both worked all their lives from 14 years old virtually until they died my father didn't make it to retirement age and they left absolutely nothing, not enough to pay for their funerals. I've worked hard all my life and have saved all my life, my DH has also worked hard all his life and is still working well past retirement age. We've paid our dues in taxes and now I'm going to enjoy spending and giving it to DCs while I'm still here, hopefully what's left will not attract IHT, I will certainly try to make sure it doesn't.

It won't affect me but it doesn't bother me what other people do.

Hated by the tiny minority of people on who's estates it might be levied. Currently around 4% of the population.

None of those working class people paid 700k for that house, most likely 90% of the money came from house price inflation so was totally unearned.

I am liable for a hefty chunk of IHT and I have no problem with it. I ran a business for years and although I’ve already paid a significant sum in tax over the years, that business also provided the assets that I have today. When I die, I feel happy knowing that I’ll be giving something back to the country that provided me with an educated, healthy workforce and an infrastructure which enabled my business to thrive. My children will still inherit a sizeable portion for doing nothing at all, so everyone is a winner as far as I’m concerned.

Sadly I agree with you.

It's disgusting that those who work hard and are financially responsible have to pay such a massive price.

No wonder IT is known as the most hated tax of all. Hugely unfair.

So the second time they only take 40% of the 60% they left you the first time round and 40% of any interest you made on the 60% they graciously left you, that makes it so much more reasonable. Work hard and you too can enjoy their generosity.

@twomanyfrogsinabox how many million are you hoping to leave to your children?