100% inheritance tax?

[Kendodd]

Or 95%, something like that.
Thought experiment.
How would it pan out?

It already is

Thé purpose of inheritance tax is to prevent generational wealth. It is also the easiest tax to avoid if the parents want to, by giving assets away during lifetime.

typically what happens is rich people don’t want to pay iht on death but they also don’t want to give assets away in life.

if we put iht up to 100% then more iht planning would go on and the country would probably lose tax revenue.

Don’t be ridiculous. I inherited a house I then sold for £218K. My mum wanted me to have that money, she’d already paid tax on the money she earned before she then paid her mortgage for the house.

@MrsOwainGlyndŵr its not currently taxed like income. Another way of taxing assets on death is to tax the receiver of the gift which is like taxing like income. There have been talkings of this happening eventually.

I still think inheritance tax is morally corrupt. That money has already been taxed.

Much housing equity has never been taxed.

Even if you adjust for inflation, the “real” value of property has just gone up and up for decades.

My parents’ house is worth, I would guess somewhere between £1.2 and 1.5 million. They started with a tiny two bed terrace in the 60s, moved to a three bed semi in the early 70s and then in to a large detached in the 90s. They are both 80 now and both worked their whole careers in the public sector. Never high earners. If house prices had kept stable in relation to wages and the cost of living, their current house would probably be (back of a beer mat calculation) be worth £400,000, give or take.

@maddiemookins16mum this happens all the time. I pay tax on my salary even though my employer has already paid tax on the business profits.

your mum will also have not paid cgt on the uplift in value due to the current rules.

Everyone says that everything they own has been taxed already, but that’s not always the case with property when it’s the main home. There will be houses being inherited now whose value has gone up tenfold (or more) since purchase, even after adjusting for inflation.
I’d be in favour of rules that tax inheritance as income. Those on lower incomes would get to keep more than very high earners.

Maybe I could get behind no income tax and 75% on death. You choose.

But I have no kids so my nephew will become a rich man in my death. If he gets £500k or £259k it's a lot of unexpected /unearned money to receive.

I don't mind iht, government needs to collect tax so if it was abolished then other taxes would go up. Better to tax windfalls to people than regular monthly income.

We might pay it but the likes of the Queen or Duke of Westminster won't but then they don't anyway. It will be ordinary people again whilst the rich take advantage of trusts, tax shelters etc

I think the idea that people would choose to live in poverty their whole lives instead of doing high paid work just because they couldn't leave their children, aged 61 (average age to inherit in the UK) a massive windfall is laughable. Anyone who did that, or believed that, is just plain stupid.

There are lots of sensible and logical arguments against inheritance tax but the idea that people would choose not to work isn't one of them.

Inheritance tax is paid by the estate. It’s not taxed as income. The amount that’s paid takes no consideration of the number of beneficiaries or their financial situation. If it was taxed as income, a beneficiary earning minimum wage would pay less tax on their inheritance than one who already earns enough to pay tax at the highest rate.

100% inheritance tax means I will give up work now and spend every penny having a bloody good time and treating my DC and then if I’m still alive when it’s all gone the state can fund my care home.

What if someone dies while their children are still minors? Should the children be left destitute or should the parent’s estate be used to provide for the children?

Trust law in this country is way overdue for reform.

This is the problem, though. We again have a Parliament full of almost exclusively very wealthy people, as we did 100 years ago. Even those MPs who come from modest backgrounds seem to acquire directorships, consultancies, BTL portfolios and so on with impressive rapidity. So we only ever get laws that benefit the well off and further divide society.

But drastic or you could just give it away 7 years before you die…which is the current situation

But how would you know when your going to die. Mt grandmother was in her mid 90s when she passed. My MIL barely made her 70th birthday. That's a big gap

With your idea OP - my son wouldn’t get a “massive windfall”- he’d get zip. So probably I would actually give up my job I don’t enjoy and do his childcare for him and my DIL. The government and the taxpayer (you) would get nothing out of me at all. We live rurally and near family. I can have a very nice life living off very little. I ONLY take the shit off the general public because it should benefit my DC. I have no incentive to work otherwise. Small house, small bills. Why should I be dumb enough to pay income tax AND have nothing later to leave my family? I can live off my garden, UC and see my GC and DS will drop me home. Not everyone needs smart cars and foreign holidays to be happy.

What about taxing it at a percentage equal to the age of each beneficiary? Maybe that would cut down on inter-generational inequalities and encourage people to skip a generation when planning wills.

@Coffeaddict the option suggested was to give it all away now which felt a bit drastic. Why live in poverty now to avoid iht?

in reality you give it away in 7 year stages from say 60 onwards. So you avoid most of the iht but you might have a bit of iht to pay on death but much less than waiting until death.

You do realise that 'whatever' you are inheriting has already been taxed to the max before the (now deceased) owner was in a position to leave it to anyone?

It's a double tax and absolutely should not be taxed again, at all, let alone freaking 90 or 100%!!

OP do you plan to give away your inheritance or are you not in line for one?

But who knows when they are going to die, let alone 7 years before?
And actually if you then do need a care home a deprivation of assets will happen and someone somewhere does pay.

How about no?

👏👏👏👏

As has been explained the rich never pay inheritance tax, only the relative "poor".