The really rich don't pay inheritance tax

....and initially with closing down Grammar Schools and latterly by charging for higher education.

Especially with the underfunding in rural areas.

scaryteachers orfly bright

it is possible to exit the circle of deprivation through education

unfortunately Labour has been closing the educational exit doors for years

Instead of being rude Ninna, why don't you explain what you mean? There is emotional deprivation in many well off families. Equally, you can be in a 'charmed circle' in a poor family - wealth doesn't come into this one, but the value your parents place on education and keeping the family together; manners, eating together; knowing where your kids are and who their friends are. Love, security and functioning as a family isn't restricted to those with with money - look at the Royal Family; well off but dysfunctional by any standards.

So explain then Ninna, because you obviously didn't explain clearly enough for this postgrad to understand!

Well I guess if you work on that proverb (very interesting and I think probably quite true for some of the super rich who gamble away their family fortunes - although more of that happened in the 80's, now it seems they become green politicos or some such), as have previously said the super super rich tax them to the hilt, but it won't happen because us middle of the road lot are far easier to tax aren't we!

On a tangent, earlier on in the thread it was posed what would knowing that it was all going taken away and how it would affect your spending behaviour (or that is how I saw it)?

I came to the conclusion today after much mumbling and grumbling from my siblings that my parents weren't helping them out (they aren't helping me out financially either!) with private school fees for 6 kids between them (own choice perhaps and asking my parents to fork out 10k per child per term!!!!!!!) - that perhaps what money my parents have they should spend on themselves, they have spent most of their lives "helping us out" with a good education to further ourselves, lovely family holidays (nothing fancy, cornwall/france but vvv fun), when my df was working he would help us out with further education, helping my ds set up her business.....blah blah blah, and now the siblings are asking what their inheritance is likely to be .

Frankly I say spend it as life is too short and they are in the 70's so perhaps reading this thread has made me realise that there is more to life and yes I can earn my own money.

My major concern with IHT is with regards to my own dd and what would happen if something happens to dh and myself while she is young, would love to have the opp to leave enough money to leave her comfortable and provide her with the life that we would like to provide for her if alive iyswim.

Clogs to clogs, kimono to kimono, rice paddy to rice paddy, shirtsleeves to shirt sleeves. And it is a proverb that describes human behavior in terms of creating long-term families as failure.

The theory of the proverb is that the first generation starts off in a rice paddy, meaning two people with an affinity for one another come together and create a financial fortune. They usually do it without making significant changes to their values, customs or lifestyle.

The second generation moves to the city, puts on beautiful clothes, joins the opera board, runs big organizations, and the fortune plateaus.

The third generation, with no experience of work, consumes the financial fortune, and the fourth generation goes back in the rice paddy. This is the classic formulation of the shirtsleeves proverb, which is as true today as it has been throughout evolved human history.

What makes you think that inherited money is frittered away?

My ds inherited a grand from my late Grandmother. It is sitting in an account and I add to it, so there is money there for uni. How is that 'frittering'?

As to the circle of deprivation - emotional deprivation doesn't just happen in the less well off families - would money be available for those who are dysfunctional but well heeled?

Try here. And then come back and ask again if you have any specific questions - happy to answer if I can

Totally with the crappy savings rate, but I do feel the need to save and am hoping that once out of this blip my savings will revert to a better rate of interest but I do see your point with regards to the savings accounts that are available to those of us who want to save. Unfortunately it seems we are being penalised yet again for doing no wrong. It does really piss me off though as I have not got myself into serious debt (mortgage excluded) by being frivalous, I have done my best to have a financial cushion should we require it, I have taken no benefits from the state apart from Child Benefit and the Child Trust Fund - am about to take the health in pregnancy grant but am currently failing to see why I shouldn't as I will put this to good use for things for my new baby - and yet apart from these I am penalised by losing out on interest whilst the banks make more money. But that is all slightly off topic and more my rant! apologies

echo crappy HSBC savings rates

"yet giving me 4% on not the 50K/100K but 3K "

Yes, I know it is 8% interest, but as you have only half the final sum in the account on average, it is 8% on 1,500 or 4% on 3,000 IYSWIM.

Doodleydoo wrote:
If I have £10,000 in the bank it is earning interest because they are lending it to someone else at the same time who will be paying double the interest on the loan than I get on the savings. It is never really "there".

I don't know which banks others are using, but when I looked on the HSBC website earlier, the rates of interest were often below 0.25% gross.

With credit cards running from around 11% to 30%, mortgages at various rates (sorry, out of touch and many options/ considerations) and loans being charged at a lot more than 1% (HSBC would charge me 19.90% for any debt on my account) your "double the interest" is quite likely to be closer to 50 or 100 times the interest they are paying.

Perhaps I'm wrong, or HSBC is the worst for interest at the moment (I have not looked at MoneyFacts for a long time) but while I agree with your sentiment, I suspect it is very much worse than you imagine.

About HSBC paying under 0.25%...

There were a couple of exceptions, one for the HSBC Passport account (not open to UK citizens, but people arriving from overseas) paying up to 4% on a regular savings account (starts at 0 pounds, maximum credit of 250 per month, at end of year, whole lot is swept into some other account, so you'd get 4% on half of the amount you paid in).

The second exception was paying 8% on the sum, with identical limits. However, to be eligible you'd need to have one of some specific accounts, either (a) savings of 50K and monthly salary paid into the HSBC, (b) 100K and some other product such as insurance, or (c) 100K and mortgage minimum 300K. So pretty high figures for you to be able to get 8% on a maximum of 1500 quid.

Whooopeee-do... somehow I don't think I'd want to bother with meeting HSBC's criteria for the dubious privilege of opening one of these "savings" accounts, just to get 120 quid interest (gross), when I'd have to have 50K to 100K with them, to start with, and they might be charging someone else 20% interest when loaning out my savings, yet giving me 4% on not the 50K/100K but 3K

Oh OK, that is a bit better then!

doodley.. you inherit everything up to 346000 or 324 (can't remember) without tax

then if you die his tax allowance is passed to you

so you can pass on 648000 (ish) without yax

There are definitely different ways of looking at this, as actually the people that this most effects are the ones in the middle like you and I, those who have 20 mill in the bank are going to be pissed off that they have to get rid of 40% but is it really going to impact on their lives? whereas the everyday person who has death in service and life insurance and accumulates a house plus say £500000 (quite possible!) is not actually going to be rich for very long. They would lose 40% of that above and beyond the threshold, and if you live for a decade after that but have no income and are past your working years you will have a nice life but if you use some to pay off your mortgage and then expect to live on the remainder it probably won't last as long as everyone thinks.

Perhaps it would be fairer to NOT take the owned home into account. If you owned more than one home then this would be moot and could be taxable but if you own a home that should be wiped out as far as inheritance tax is concerned and perhaps cash etc should be looked at solely. I don't know, there prob is no really good solution but it is the loss of home after losing a loved one that irks me. Also we have concentrated on our children but inheritance does also go to the partner/wife etc and although more tax breaks here if you have both been saving then it is still a little unfair! (If DH paid for everything and my salary was saved and I die then he would I assume be taxed on it).

Perhaps some decent politicians (haha) will come up with some interesting view points?

I'm saving so that is anything happens to us whilst ds is still a minor, there is enough money to fund GCSEs, sixth form and uni, without him (or my family) going into debt to pay for it. I want there to be enough money for that, and to pay off the mortgage on the house, so that he an asset for later and somewhere to live if he needs it.

I also spend money on him now, but you said earlier Mini, that that is not fair.

It's up to us how we spend the money we earn, and if we want to leave it to our kids, then that is our decision, not anyone else's. It may be the only way they get a pension!

Ok, oojimaflip I agree that it would be better to talk about effects on wider society, rather than fairness (not least since fairness is such a subjective concept). The results of increasing inheritance tax and reducing income tax would be (hopefully) to encourage people to seek to earn more (as they'd get to keep more of it), and to encourage older people to spend money on themselves and not save it for the next generation. It would also reduce the gap between richest and poorest (since many of the richest have got there through inherited wealth, one way or another). Personally I agree with those aims.

Doodleydoo - I think I would allow a partial exemption from/ deferral of inheritance tax where parents die while their kids are young. A 2 year old is obviously not in a position to support themselves/move out of the family home/etc. (The current system would probably require the 2 year old to sell the house though.)

scaryteacher I don't think most people build up businesses and savings for the sake of their kids' inheritance after they are dead. They do it for themselves and so they can benefit their children while they are still alive.

You are right, it might be that its the level that it is taxed at that pisses me off and that if you want to try and own your own home and save up for your future i.e you don't believe there will be much of a state pension scheme in the future, then you die and forfeit your state pension plus any of the benefits that you have accumulated by saving that money by it all going to the govt.

From my own pov, I was brought up with a "rainy day" mentality as was my dh. If I wanted something I saved up to buy it, rather than some recent mentality of "right now" where you can't afford it but have it anyway and get yourself into financial strife. I have always felt more comfortable with a small financial cushion behind me just in case, since having dc that cushions has become more of a whoopee cushion than the beanbag I had in my single days. But for example we had to replace our boiler, we were in a position that it stung rather than needing pain killers iyswim.

I understand the need for spending whilst our economy is down, but there is also a need for saving. Where does everyone think the money gets their money to lend people. If I have £10,000 in the bank it is earning interest because they are lending it to someone else at the same time who will be paying double the interest on the loan than I get on the savings. It is never really "there".

I really wish I could change this mentality but actually I don't think it would help the economy at large in the long term. Besides I want to try and have the ability that if we really need to send one of our dc to a private school(for some reason I don't know but having that option would be nice!)or if we needed some medical treatment for one of them that wasn't totally provided by the nhs then having a small cushion would be great to go someway to being able to afford it.

That is the kind of person that I am, that my dh is and that I hope to bring up my dd as. I am that person who will be screwed over in the future should anything go wrong. Meh. Oh Piss.

Does that get my position slightly more across, I am not against paying IHT but I do think it should be fairer, OK the dead don't vote but their inheritees do. Just out of curiosity if I left the bulk of my estate to a charitable concern would that get charged IHT too?

The people who should be taxed more are Footballers imho, all they seem to do is not win the world cup so far for a very long time, get paid lots of money to shag inappropriate women who then sell their stories and manage to get out of paying lots of income tax. That is not fair, I am afraid I am not a footie fan and don't really see it as a talent but an over paid sport! Some of those guys could significantly lower the national debt!

Doodleydoo - Well not voting so much as your spending. I doubt you actually care that much it's taxed twice - it's the total level of taxation that bothers you. If inheritance tax was 0.1% would you be that bothered?

What are the results of different levels of inheritance tax on peoples behavior (saving versus spending etc), how does this affect wider society, does this contribute to the kind of society we want to live in? These are more appropriate questions than if it is 'fair' in the very limited terms that taxation is discussed in.

oojimaflip - Sorry I don't understand your second part as in What are the RESULTS of these things in terms of peoples behaviour?

Do you mean how would this taxation reflect on how I behaved with my spending or my voting or what - am not trying to be difficult but just trying to understand you second question.

On the first part, as someone who contributes to society through my taxation I don't feel it is fair that it is taxed twice, and yes what I think is fair does matter thank you very much, just as it matters to you!

Scary - I totally agree with you.

Perhaps the fairest thing of all would be to increase the tax threshold from £325,000 which is less than a 1 bed flat in parts of London (and it is the few and far between that have no mortgage!), this means that those who are in the percieved richer areas would benefit from not losing both their home and their loved one in one fail swoop, and those in the poorer areas but with more capital would also benefit. This would then mean that anything above the increased threshold could still be fairly taxed without it impacting on people at a time of grief.

Not everyonne who is super rich inherited loads of money from their ancient ancestors, and many of those who are still loaded have actually worked to keep their money growing and contributed to those who haven't had those opportunities, but there would be far fewer of those if inheritance took it all away from them to start off with.

'it is already unfair that some kids get brought up with loads of money, others don't. that is compounded by letting the richer kids inherit.'

I really don't get this point of view. If you have worked and got your qualifications, got a job etc, why is it 'unfair' if you spend your income on your children?

If you don't let a child inherit because of their parent's income when they were alive, then you take away all incentive to build businesses; amass savings; not be reliant on the state for help; as if I can't leave it to ds, I am so not leaving it to the government.