Does anyone think that the Tory plans to increase inheritance tax are a good idea?

Hello, new to this!

Just in my own personal view, isn?t the point that tax has already been paid on this money the overriding factor?

I find it a disgrace that people who have worked hard all their lives and want to pass a helping hand on to their kids, get penalised for doing so. Is there nothing that they will not touch or leave as our own?

The thing about tax, is that it's a game, rather like scrabble. Everyone is supposed to play by the rules. HMRC write the rules, and then tax planners work out how (legitimately - ie within the letter of the law) to avoid as much tax as possible for their clients.

So when the press talk about loopholes, it always bemuses me rather. There are so many legitimate ways of avoiding so many taxes. There are very few loopholes in the sense of errors in drafting, and these are usually quickly corrected. What happens is that some ingenious soul will think up a structure that complies with the rules but saves people some tax.

One of the best bits of legislation introduced was the tax disclosure regime - which means that fancy-pants planning schemes have to be notified up front to HMRC who act pretty quickly to clamp down on the abusive schemes or where there is a risk of substantial loss to the exchequer.

So all the NIC avoidance schemes - being paid in gold bullion or coins or whatever - have all been clamped down on. Income tax avoidance schemes are rare. Very rare.

So its really IHT that needs a radical overhaul IMO. Because I truly believe it is unfair. But I don't believe that this is what Cameron is suggesting. He's just suggesting a tax cut for the middle income types as a populist measure.

"Property Tax" is most regressive. A poor person with no property (other than clothes on back) is forced to pay more than 1000% in Property Tax (council tax). But owners of property over £10,000,000 pay less than 1% - sometimes even zero ref-05

A person with any logic, using only public domain, can determine for instance that both NICs are taken from one source - an employee's payroll earnings. NICs thus constitute an additional 22% of Income Tax taken from Gross Earnings (as was publicly admitted by John Major) ... payable in full on earnings less than £30,000. So [majority] have gross income taxed at rate of 44 - 45% ref-01

But highly paid politicians, mandarins or media men on £300,000 pay only 1% - shortly to be 2% - NIC tax. Additionally they can protect much income from ...direct tax.

taken from here

this situation has got worse since this was writen. NIC is was of the most unfair taxes as it stops at around 40k?

I would like to see the threshold rise to at least 100k

Quattro - do you know if HM Treasury or Revenue & Customs test out any changes in tax policy to see whether they can be got around by rich geezers who can afford tax planning?

Seems to me it's a very complicated game but one that is worth playing, to stay one step ahead of tax advisers to the wealthy!

exactly, fruitstick, especially your last line!

Both of my parents have died and I have paid mu fair share on inheritance tax already, before the limit was doubled as well .

I have mixed views on it. On the one hand, I am increasingly annoyed that the super wealthy just avoid it all anyway by complicated trusts etc, whereas people who have less (although still a lot, fair enough) don't plan and are the ones who bear the brunt of the taxation. It's the loopholes I object to, not the tax.

On the other hand, I have paid 40% on the money I have earned so I really don't see why I shouldn't pay 40% on money that I haven't.

Whichever way you look at it, the people who have worked hard all their lives to earn it are etc are dead, and therefore not the ones being taxed.

I'm not sure inheritance tax is a tax on the wealthy - it's a tax on the not-wealthy-enough to afford tax schemes.

And most of the schemes - particularly income tax or capital tax are being closed down. It's really only IHT that needs reforming. Or abolishing and something better being thought up - wealth or net worth taxes for instance.

average house price in Greater London was £260,764 back in May this year.

Not £650k, or even £325k.

or, rather, that ordinary people have to subsidise people who stand to inherit £650k (or £325k depending on whether it was from a married couple). Anyone who has £650k is entirely free to enjoy it as long as they pay their taxes. Anyone who gets more than £650k free gratis and for nothing should be ruddy grateful that they only have to pay tax on a tiny proportion of their gains!

Well that's an argument for abandoning taxation entirely, given that the rich will always be able to afford expert advice about exploiting loopholes.

Or it's an argument for closing the loopholes. Does government not employ people who used to do tax planning for the rich, so they can second guess what the beggars are going to get up to next?

Either way, it is definitely not reasonable that people who have far less than £650k (which is most of the population) have to pay higher taxes to subsidise those who do.

As for 3-bed terrace, I think you'll find there are plenty of people in London who do not own any property, or own property worth far less than £650k. Someone posted average property prices further down the thread.

There are two bedroom flats in Mayfair - doesn't mean said owners of 2-bed flats are particularly hard done-by or deserving of support from taxpayers.

I think you are not addressing the point that I am making Edam, which is that a tax which affects people who leave more than £650k (the price of a three bedroom terrace in London) but doesn't really affect people who leave substantially greater sums (providing they do the proper planning, and many do) cannot be a reasonable tax.

Yes. I think raising the inheritance tax threshold is a good idea

oh, it's the old 'hard-working' stuff again. Silly me, forgot that anyone in possession of more than £650k must by definition be hard-working and and worthy of sympathy than anyone who has less.

Clearly, if you have less than £650k to leave, you are a slacker who really should being trying harder...

The trouble with inheritance tax is that it really only affects middle income families.

The poor don't pay it. The uber-wealthy can ensure that they don't pay it, by careful and judicious trust-planning.

So really only hard-working families actually pay it. The sort who work hard all their lives, have most of their money in their house and maybe a few savings but because houses are so expensive nowadays.

I think inheritance tax is absurd. Penalises the thrifty.

Dickensian, maybe not. But it's a fair concern that my modest house which just happens to be in a high-cost housing area stays as my children's property, not the chancellor's.

But obviously as we're 'middle class' we're fair game. Again.

Don't the super-rich bung their surplus cash into family trusts and avoid inheritance tax? I'm rather in favour of inheritance tax except that our governments have messed up our pensions and I am rather hoping to be able to top my meagre pension with some money inherited from my family.

apols yes sorry that was a red herring. Was confusing myself with intestacy.

However, there are vast chunks of money which aren't taxed (again, if you order your affairs sensibly).

Any insurance policy which pays out directly to the beneficiary doesn't qualify for IH. Pension lump sums paid out on death to a named beneficiary don't qualify. Moneys put into certain trusts (if you survive 7 years from the setting up of the trust) don't qualify.

It's hardly a Dickensian workhouse situation for the children of the middle classes.

theyoungvisiter a house passing under a joint tenancy to a non-spouse would still fall into the estate for IHT purposes. Joint tenancy just means it automatically passes on death without the need (or ability) to specify that in a will. Ie if you died intestate and owned the house with a joint tenant the co-owner would inherit, but unless they were a spouse they would still need to pay IHT.

but the point is that everyone gets to pass on a very sizable chunk UNtaxed.

It's only the estate above £650 (in the case of a couple dying simultaneously) that is taxed at 40%.

Obviously it would be very sad for your children to lose their parents but are you seriously telling me that situation is worse than a child whose parents die in council accommodation with no house and no savings? Oh, but look on the bright side kids, at least you don't have to pay inheritance tax

Whichever way you look at it, your children would still have £650,000 plus 60% of everything above that threshold. That's hardly peanuts.

And in case you think I don't know what I'm talking about, my mother was a single parent and died when we were quite young, and my sister and I had to pay inheritance tax on everything in her estate above £325k. So I am not arguing this from a nimby POV but from the POV of what's right and fair for society as a whole.

We pay a lot of insurance money each month to make sure this wouldn't happen to our children. I would love not to have to pay this.

well yes, if they were adults and our house was worth over £650k (since we are married). If ds becomes an adult who stands to inherit over 650k I think it's entirely reasonable that he should pay tax on it!

Your dc could be made to sell the house to pay the 40% tax and then all the time it takes to sell the house your dc will be made to pay interest on that money. Unless you left enough cash to cover the 40%

Capital gains from house price inflation in your principle private residence are not taxed.

There are plans to change the law wrt unmarried couples although tbh there is a real argument that if people want the legal rights of marriage, it's fairly easy to actually get married (and awarding legal rights to people who live together might catch out people who don't actually intend to hand over their inheritance to the person they live with anyway).

There is an issue re. occupants being made to leave their home when the owner dies - possibly the law needs adjusting to give these people the right to stay in the home with the tax bill deferred until they move on. But that does not in itself make inheritance tax unreasonable.

"it may be a home and tax has to be paid at 40% over the threshold, meaning an unmarried partner would have to cough up"

Not if they'd ordered their affairs sensibly - if they had a joint tenancy then the house would just pass to the surviving partner, it doesn't form part of the estate.

That could happen with a dependent child, I agree.