Anyone else now falling into possible inheritance tax territory?

[YumiZumi]

I don't feel rich but I will be dead rich!

Big mortgage, high childcare costs so things are tight but if DH or I were to die, then if the second we're to die soon after - our mortgage would be covered by life insurance, there'd be one death in service (presumably the second death in service wouldn't be part of the estate?) plus our current pension pots which don't seem that large. (Or large enough to give a so called comfortable retirement)

All comes easily to over a million. Yikes!

My bank balance tells a very different story!

IHT was only meant to be paid by the wealthy like those with huge personal wealth and landowners.

I absolutely hate it and I have worked hard, done the right thing paid all my taxes, paid tax to move home, why should what left on my death be taxed. My savings pensions and money that I have used to buy my home be taxed again.

Hopefully the conservatives will say that they will abolish inheritance tax.

There are millions of people who are going to be affected by this, so I'm sure it will be a vote winner.

I really don't get the worry here. You're concerned that if both of you die, your estate will be taxed. Well, if it's that big an estate, then why not? Your children will still inherited hundreds of thousands worth of value. They're going to be OK.

I'd rather pay inheritance tax when I'm dead and have decently funded public services when I'm alive.

Life insurance is often exempt from IHT.

One of the major issues is that Probate is taking 12-18 months and assets like houses cannot be sold until after the probate has been completed.

Inheritance tax on the other hand is due within 6 months of death. I personally don't have a couple of hundred thousand to satisfy the IHT prior to probate being completed. Not that I inherited anything from my parents when they died. Nor could I save up so the IHT was in the bank should my estate reach the point of triggering IHT.

If the estate includes property, tax can be paid in instalments over 10 years.

You won't be hit by inheritance tax when your estate is calculated for probate because you'll be dead.

So, don't worry about it.

I think your children getting a windfall of £330-£500k (assuming you have two or three) is a vast amount of money that means it's a bit unreasonable to gripe.

@TheSpoonyNavyReader pension contributions are not taxed, so it was wholly inequitable to allow people to pass on pension funds to their children tax free.

If I die in the circumstances in the OP and manage to pass more than £1m of assets to my kids and my estate has to pay inheritance tax then I will be sad (of course I won’t, I’ll be dead) only because I (and DH) will not have lived to enjoy our retirement. I won’t be sad that my kids have inherited over £1m and my estate has paid tax on the excess above that amount. At least half of that £1m will be a pension on which I haven’t paid tax, and almost the same again would be the unearned increase in the value of my house which hasn’t been taxed.

As someone who has not (and will not) inherit anything more than my mum’s collection of tat, I find it astonishing that anyone can moan about the prospect of only being able to pass on £1m tax free.

The death in service and life insurance are outside of the estate, as you didn't have that money in life.

Passing property on to direct descendant gives an extra chunk to the allowance, as does transferring a spouses allowance if they go first.

And then there's the likelihood of care home fees eating the lot up before you die anyway.

@jay55 death in service payments from registered pension schemes are being brought within the scope of inheritance tax, even where they previously weren’t because the benefit was distributed under a discretionary trust.

Very grabby of the government.

They didn't though did they? They've just had 14 years to abolish it and sort out care home fees etc.
They didn't bother.

Probate mostly not taking 12-18 months. 16 weeks is what the probate office says, after about 4 weeks with HMRC, but probate turned our application round in 4 weeks. True that IHT is often payable before a house can be sold, but you just have to accept that and pay interest to HMRC because of paying late. It's not the end of the world in most situations.
Like @Bbqnights, I struggle to understand why people have a problem with inheritance tax. If your estate is big enough that there's IHT on it, you get to give your kids/other heirs a sizeable amount money, so they're at a big advantage compared to all the young people who don't get a leg up. It makes me feel very uncomfortable that we're increasingly moving to a Jane Austen type world where the only realistic way for all but the very elite high earners to buy their own home is through inherited wealth, or finding a life partner with inherited wealth. Feels all kinds of wrong to me..

this ^

and my estate will be liable for IHT

Quite agree

The truth is that the truly rich never pay iht or pay minimal iht and the government knows this. Things like selling houses to their kids for a £1 while alive, trusts, putting property in joint names, all protect assets from iht.

I don't think I said either way how I felt about my estate paying inheritance tax, it was more that we now fall within that realm.

I know life insurance and death in service is outside, but what if DH dies - then that all becomes mine and that plus the house plus his & my pension is over the million tax free allowance.

Same (and I will be hit by this too)

I honestly don't have a problem with IHT on pensions, in fact it's always seemed a bit of a loophole that there wasn't tbh.

Pensions provide tax incentives to save for an income in retirement. That makes sense. It doesn't make sense (to me) that the savings pot is treated differently to other savings in an inheritance situation.

It will impact our kids but they have been brought up to be aware that to get the things we need the broadest shoulders need to contribute more. It’s breathtaking how many people of the Right both complain about public services that are broken yet in the same breath complain about paying more tax. They are hand in glove.

Totally agree (and I say that as someone with a very healthy pension pot)

But pension contributions more than £10k per annum are taxed if you earn over a certain amount...

But spouse exemption hasn’t been changed has it? Everything you leave to your husband and vice versa won’t be taxed at all?