Labour voters….

@blossomtoes the planning that is happening seems to largely be earlier retirement like we saw with NHS consultants. Once the house is paid off and you have a large pension pot to comfortably live off, there is no incentive to keep working. Many continued precisely because they were doing it for the next generation and bumping the tax free pot up for them.

Yes, I did read it and I agree with you regarding it being better not to have such a steep immediate 40%.

I just wanted readers to know 40% kicks in at £375, it frustrates me people keep talking about £1M and think it will only affect the few. Now Pensions are subject to inheritance tax, most people will be paying it.

SORRY I shouted! 😬

I know. I just genuinely don’t understand why people care about tax deductions after they’re dead. And the pension issue is the height of greed when the money was tax free on the way in. I really wish HMRC was as inventive with plugging loopholes as tax accountants are at exploiting them.

@Didyousaysomethingdarling did you actually read my post? Maybe I needed to use caps & bold at the beginning 😆

SIPs are now included in IHT so those dying younger than expected will be paying more. Pretty much all City professionals in London with a house will be caught and are busy planning away.

ITS NOT £1m if you’re single/unmarried and don’t own a house ITS ANTHING OVER £375k which gets taxed at 40%. Criminal!

The IHT threshold hasn’t gone up for 16 years @taxguru. It’s not governments encouraging people to reduce their hours and stuff their pensions to avoid paying tax. It’s human greed and people who are never satisfied that they have enough.

It's going to be a hell of change of direction for any government to start telling people that they should be paying more tax, after a few decades of successive governments "selling" lower taxes!!

Isn't that Reforms policy? lower taxes

@taxguru my parents are very left & have not done a thing to avoid it & wont be.
In-laws are a bit more conservative & sold some property some years ago to give DH a significant house deposit & are careful with gifting money. Neither set wants to downsize or avoid care costs.

Get more people paying tax at lower rates and make it harder to avoid by removing/reducing allowances/thresholds etc.

You also have to reverse the government/political narrative of the past few decades. It's governments who have increased the IHT thresholds and brought in new zero rate/exempt amounts. It's governments who've encouraged not paying tax by introducing incentives like ISAs and pension contributions and heavily marketed the "tax breaks", etc. It's governments who've signalled that paying lower taxes, using more exemptions/allowances etc is a good thing!

It's going to be a hell of change of direction for any government to start telling people that they should be paying more tax, after a few decades of successive governments "selling" lower taxes!!

@footpath - OK, I should not have used the word “everyone”, but on the whole, rich people have financial advisors and lawyers and wills and planning takes place, unless someone dies young or has no family, and even then, quite often, if they have significant assets they will plan for it to go to a cause they believe in, rather than HMRC.

i haven't claimed that the richest don't try and avoid paying inheritance tax just that some do end up paying. I think I read it's about 25% that pay the full whack. But as I said the people with 5m plus estates are tiny in population terms.

It's usually driven by the "giver" rather than the "receiver". Yourself and siblings may not be bothered and may not be "pushing" your parents/in-laws to plan their affairs to reduce/eliminate IHT, but they're probably doing it anyway as they'll be more aware of IHT etc than you are usually.

Usually it's only payable because of a "failure" of long term planning. I.e. someone dies too young before they've undertaken IHT planning, or they've got it wrong in some way (or their professional advisors have got it wrong).

I regularly look at the wills of people who've died, for example, and I'd say more than half the ones I've seen (Relatively "normal" people with estates of less than a couple of million - certainly no landed gentry etc - just people with a decent house and maybe a holiday home or a few but to lets, decent pension funds, a few investments, etc) have taken steps to avoid IHT by use of trusts, lifetime gifts, etc. thus paying nil inheritance tax.

I see VERY few cases where IHT is payable. Usually it's the ones who've died "early" and intestate without actually doing any IHT planning as they didn't expect to die, hence not even making a will!

Advising on IHT is pretty much "bread and butter" work for solicitors when advising on wills etc - even if they don't actually get instructed specifically, it's often in the "default" will template to include simple will trusts.

My in-laws & parents have houses well over 1m. My siblings & I are ok with paying tax on it if care doesn't take it. I don't understand the reluctance to do so tbh.

Exactly. Why people care about paying tax when they’re dead is beyond me. What we really need is to change attitudes around paying tax. We’re never going to get decent public services until people understand that they need to be funded from taxation.

@Araminta1003 I just simply disagreed with your comment that "Everyone with assets above 5 million plans around inheritance tax quite substantially and well in advance." because it isn't true unless you can show me otherwise?

Trouble is, that if, say Filipino nurses are sending money "back home", then the UK isn't benefitting from their spending of public money. If we employed more UK born staff, they spend within the UK and that would benefit the UK economy. After all, they're being paid out of UK taxes paid by other people, as it's the public sector NHS. It would be different if they were here and being paid by private businesses etc. But the frequently quoted justification of higher pay for public sector wages (paid by the taxpayer) is that the money comes back to the UK in terms of taxes and spending.

I've said many times on MN, I think there should be an over-riding limit of never "losing" more than 50% of your extra income,

agree

Or widen the tapering bands etc., so that the "marginal" loss of benefits isn't quite so severe, especially the binary "yes/no" loss of free childcare when you go just £1 over the £100k cliff edge.

I've said many times on MN, I think there should be an over-riding limit of never "losing" more than 50% of your extra income, at ALL levels of income, encompassing both benefits and taxes. So that if you earn an extra £1, at ALL levels of earning, whether minimum wage, or £100k, you're no worse off by more than 50p and get to keep at least 50p of it. Make a statutory limit of 50% of "marginal" tax rate/loss of benefits rate.

If we could achieve that, and people knew they're never be worse off by earning more, we really could "make work pay" and get people back to work and part timers working more, which is the only way of getting back to decent levels of economic growth.

Out of 600000 deaths, that is nothing. Vast majority of rich people plan around IHT. Yes some will stay in their big mansions because they want to so they end up paying and some have unexpected deaths. Or do not have direct descendants they want money to go to. But in most cases, rich people have children and plan their IHT years and years in advance so they do not pay anywhere as much as they would otherwise have to, if there were a inter vivos gift tax, for example.

"According to figures for 2021-22, the top 40 largest IHT bills averaged £9.2m – meaning those at the top of the tree will likely have paid far greater. Titan’s FOI request revealed that 889 families were stung with charges in excess of £1m, including 67 estates where IHT exposure was greater than £4million."

I was thinking more about the immigrants emigrating back out. As you say, UK trained medics have been leaving in droves for years.
I’m not sure UK trained medics send much money back home to support family members once they leave. So I don’t think it’s possible to emulate in quite the same way. The Philippines benefits from money coming into the country from its emigrant healthcare workers. I’m guessing we have different ways of getting people from outside the U.K. to invest money here and that investment is much bigger.

The only people who do not plan for inheritance tax and end up paying a lot are those with net assets between 1 million and about 3 million, or who have a completely unexpected death. Everyone with assets above 5 million plans around inheritance tax quite substantially and well in advance.

The vast majority of the population don't have assets above 5mill. And for those that do certainly some of them do pay significant IHT.

If you are talking about more progressive tax systems with fewer cliff edges I’d agree. The U.K. has an awful lot of cliff edges and seems to keep making more.

I would stop means testing CB & free hours childcare.