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

@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.

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??

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?

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

@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.

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?

@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?

@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.

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.

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

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.

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

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.

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.

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.

@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.

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

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.

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.

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

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.

What the OP and other proponents of increasing the IHT or "abolishing inheritance" should be questioning is why we still have laws that allow the crown, for example, to benefit from the estates of those who had no relatives and never left any will. Why is it not the state so keen on taxing the public at every turn because apparently there is never enough money for any public services that collects this for the benefit of those public services?

https://www.theguardian.com/uk-news/2023/nov/23/revealed-king-charles-secretly-profiting-from-the-assets-of-dead-citizens

Wipeywipe was not being hypocritical. She was making the point that when people argue against inheritance tax on the basis that it reduces the incentive to work, they forget that income tax does the same thing (to a much greater extent, I believe). And if you increased inheritance/wealth tax then you could reduce income tax to some extent.

That's a pretty high bar though, if you can only buy a house if both halves of a couple are unusually high earning. I bought a flat in zone 2 in early 2000s while working as a PA and DH worked in an off licence. The barrier to home ownership now seems absurd to me. DS will be ok as I have a million pounds of equity in my house now with quite a lot of that built out from me buying at the right time. I still would rather say a somewhat more level playing field.

Obviously life isn't ever going to be totally fair but I don't see why we should let perfect be the enemy of good.

Well unsurprisingly I think this should be changed too!