To think it’s unfair that some people get inheritance while others start with nothing?

A couple - both working in financial services or tech in London - can easily afford to buy a nice house 3 bed house within commutable distance to London within 5 years if they are willing to make the sacrifices :

1. live modestly on 1 salary
2. longer commute
3. prioritise savings over lifestyle.

This is possible while they are still under 30.

Housing and uni are now so expensive that this strategy wouldn't work out so well today.

From family experience, a good many people who inherit at that sort of age, will pass on part/much/all of it to their own children, who will very likely be at the stage of wanting to buy a house or flat, when prices have soared.

I don't disagree we are an outlier re IHT but the problem is low wages & high taxes. And of course the cost of public services such as the NHS which are in a bad way. We cannot have it all without raising taxes. And if we want it all it can't just be increase income taxes.

I take your point, but it’s a natural human instinct to want to help one's children have an easier life.

@wipeywipe re the tax rates, that depends on whether the aim of your tax regime is to incentivise workers so the tax take is actually maximised or simply to discourage people from earning more and therefore paying more tax.

The USA barely has an IHT (it kicks in at an extraordinarily high level) while Australia and a multitude of other countries have none. The UK really are an outlier.

Parents B have the choice of focusing on their child’s education, take personal responsibility to make sure the child does well in Stem subjects and subsequently improve changes of ending up in a high paid job.

My parents did just that. Although I might inherit something, it is not life changing for me. We have a house paid off, retirement savings and a great lifestyle. I worked full time all my life and chose to go into a field that wasn’t my passion or anything. Chose it only for the money as financial stability was a priority for me. Zero regrets.

Society as a whole benefits if people are incentivised to work hard

There isn't an incentive to work hard if you are paying lots of tax and lots of rent and struggling to save a deposit plus your wages are low vs other countries. Thats the issue.

Pretty patronising comment. The op suggested abolishing inheritance altogether, that is what the posters you describe are responding to.

She said heavily tax or abolish, that's what I read at least.

@ThisCandidCritic
If you had made the right choices and extremely hard sacrifices, you definitely wouldn’t be asking the question.

The UK has one of the harshest IHT regimes of any country. Interestingly places like Sweden have none as do a tonne of other countries.

We are a bit different to European countries like Sweden though when it comes to other things eg income inequality or wealth inequality.

Pretty patronising comment. The op suggested abolishing inheritance altogether, that is what the posters you describe are responding to.

I think that most people would probably agree that a rate of around 40% on earnings is fair and reasonable.

Not on 50k plus it's not.

@Anonym00se I don’t think anyone is suggesting that people who work hard shouldn’t pay tax and I think that most people would probably agree that a rate of around 40% on earnings is fair and reasonable.

It’s hardly surprising though that people object to an effective tax rate of 67% (which is what some estates are facing following the changes relating to pensions etc ) on their estates.

Society as a whole benefits if people are incentivised to work hard, be good citizens and save for their own and their children’s future. Not least to support their own care costs and of course provide for those who are unable to work. We are now in the territory of being punished for that. The UK has one of the harshest IHT regimes of any country. Interestingly places like Sweden have none as do a tonne of other countries.

@Totallymessed so you are saying every adult who can work should be full time? No stay at home parents? what about people who retire early?

I often wonder if the hysterical Mumsnet masses understand how inheritance tax works.

”My parents worked HARD all their lives and scrimped and saved to afford their little house, and I’ll be damned if the pesky government are going to take it all from me”.

I very much doubt that your parents’ “little house” will be worth over a million quid, so they won’t be paying any IHT, so you can calm down.

And if “working hard” for something means that it should be protected from tax, why are we all paying income tax?

@wipeywipe but less than 5% of estates are liable for IHT whilst just under 15% of tax payers are higher rate. For the most recent year where statistics are available 53% of total IHT liable estates were located in London and the South East. At which time the median London salary was around £47,500.

For it to be true that the majority of IHT is paid by estates with a taxpayer who is not a higher rate tax payer, lower rate taxpayers would have to be liable at a relatively higher proportion than higher rate taxpayers payers.

There’s always a lot of talk about vastly inflated house prices but good luck funding a £1m plus (the allowance for a married couple) property in London with all the council tax, insurance, maintenance, utilities etc if you’re income has never risen above £40,000. Sure some can manage it but it’s not likely to be the majority.

People working full-time where possible and paying income tax might be helpful.

And I think care in the home needs to take into account house value because the current model isn't sustainable. I'm not sure where else the money can come from?

YABU, life isn’t fair. I got an inheritance from my grandparents in my 20s. It wasn’t loads, and they worked hard for their money but their own parents weren’t wealthy by any means. Without that money I wouldn’t have been able to afford my house. My sister used her share for the same thing, and I know a couple of other people in similar situations. So if inheritance tax was abolished, we’d all be in council houses. Is that the right solution??

@LillyPJ I don't think inheritance tax should be 100%, I do think salaries need to be higher and income and wealth taxes should be more aligned.

@AzurePanda

"In 1991–92 just 3.5% of UK adults paid the 40% higher rate of income tax."

"Decades of soaring house prices, economic growth and final salary pensions mean that 20 per cent of over 65s have a wealth of £1million or more in real terms, up from just 7 per cent in 2006."

"Analysis by wealth manager Netwealth shows that the total wealth owned by over 65s nearly doubled - from £2.4trillion to £4.7trillion - in the decade between 2006 and 2016.
In comparison, those between 25 and 54 years old saw their wealth increase by just 9 per cent in real terms during the same time."

For those living in higher priced properties now I think when & when you bought is more relevant than how much tax you paid. And as I already said whether a young person is on the ladder today is more tied to whether they had help vs income only. We do have an issue that income alone can't really propel young people forward today which isn't good for the economy. You can disagree though.

Anyone with any sense gives money away more than 7 years before they die. Then get under the £1m threshold.

Owning a fairly modest house in London gets people to £1m. It’s not much to do with income tax if you bought it 50 years ago. It’s more to do with managing money. Most people are able to manage their finances to avoid IHT and do prefer to distribute money earlier. It’s more helpful for family to do that.

I don't think stopping inheritance would make much difference to equality. There are so many other more important inequalities.

it’s a statement of the bleeding obvious so why would anyone research, publish or even reference such a statement?

Is that the basis for statistical research, whether something is obvious or not? I'm not sure...

I’d love to see an explanation of how the majority of the value of estates liable for IHT do not belong to higher rate taxpayers given the very small percentage of estates involved.

I gave one up thread, it's about property price increases and another poster posted the below.

"the wealth about to be transfered came from house prices increasing 1145% since 1980 and equity prices increased by 7 x since 1984. "

Have you really never heard people talking about how their parents bought a house on a normal salary that has massively increased in value? Or pension schemes changing for younger entrants?