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!

I would rather give everything over £1million to charity than to HMRC, with the added benefit that if there is any residual over £1m it attracts a 10% discount on the basic 40% IHT rate!!!

That's correct, it's only when he passes that anything has changed

Respectfully, why is this remarkable?

You've got some nice death in service schemes - most people don't have this

You have a mortgage on an expensive house - most people don't have this.

You have life insurance to pay off a big mortgage - most people don't have this

You don't feel rich at the moment because you're servicing the mortgage and those schemes don't kick in until you die.

But if you don't value them, you can get rid of them and then your estate won't pay IHT.

Assuming you do value these safety nets, why shouldn't your heirs pay IHT on a large estate? They'll be inheriting far more than most.

Well, don’t die then. Seriously what a first world whiny problem. Getting your entire mortgage paid off when your DH dies is a windfall that most won’t get. Why shouldn’t it by taxed when you eventually die? Do you think your kids will be hard done by if they only get 500k each? I think given that most get nothing or a lot less than that, that they will be fine.

Charities are wicked when it comes to administration of wills. Your executors will need to prove that everything has been valued/liquidated at top value to contribute as much as possible to the first £1m.

You'd have to really hate the executors to do that to them. If you want to leave to charity, please do it as a fixed sum, not a % or balance over.

Personally, having worked for many years in the charity sector, I'd rather it went in tax.

I keep banging on about this but inheritance tax is the only fair way to pay the absolutely crippling care home bills that are currently eating up ever large percentages of council budgets.

Is it fair that if you get dementia your entire estate gets swallowed up by care home fees but if you don't you get away scot free? That makes inheritance a lottery for the lucky.

Young people can't afford to buy home, have children. Funding elderly care from their tax receipts is a generational injustice. Not to mention the leisure centres, libraries etc used by the young which have to be closed in order to fund these bills. Inheritance tax must rise to pay for it instead.

Well then you will be a very rich person and should expect to be taxed.

Are you arguing that you somehow wouldn't actually be rich or shouldn't be taxed?

Totally agree.

The huge upswing in the housing market means lots of people are going to inherit lottery win size amounts of money, it's only right that these eyewatering windfalls should be taxed. And it's the only way to start to damp down levels of inequality that keep over spilling into violence

That rather depends on the charity though... But yes, I agree that leaving an entire, % or 'residual of' estate to charity does lead to the mercenary behaviour you mention, though it can to a large extend be mitigated by professional will writing, and I have seen a 'no challenge' clause be particularly effective

I think op is probably arguing that it's possible to be extremely rich but have little in the way of liquid assets if it's all in the house and pension

You may have as much day to day funds as a really normal person who isn't super rich

However when you die the assets get liquefied and then it's obviously a huge amount

This isn't true. Unless you do have the cash handy. If you don't abd it's tied up in the estate you can pay it off when the estate is sorted/sold etc

Yes, the wealthy landowners don't pay it at all.

The Duke of Westminster's son paid nothing when he inherited billions because all his wealth was in a trust.

It is ordianary people who pay it.

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

This

Death in service benefit is now caught up in the IHT trap and does not sit outside your estate (from 2027) along with pensions, spousal exemption still applying obviously.

Which is particularly harsh as the death in service benefit is to support all ones dependants regardless of marital status. So if you die at 42 and intend teh death in servce benefot to support your children through to adulthood, it is now worth 60% of what it was

I’ve said this on other threads, any government will be coming for some of that wealth in the future. It will happen by default, you need an operation? It’s a 2 yr wait. Getting older & struggling at home? Need to employ private carers to come & help as the state offer is woeful.

Only if your other assets are significant too.

I keep banging on about this but inheritance tax is the only fair way to pay the absolutely crippling care home bills that are currently eating up ever large percentages of council budgets.

I find it incredulous that people expect a decent level of care by staff on crappy wages funded by others so they can give all their assets to their children.

The Trusts themselves pay 10% tax every 10 years though, to mimic the once every 40 years inheritance tax bite. And the beneficiaries pay income tax at marginal rates on what's drawn from the trust. So it's nowhere near as generous as you make out, but does allow for effective long term management of assets. In fact, once could make the argument that HMRC take more tax from Trusts as they get 10% every 10 years on an asset that is increasing in value!

Great post. 100%!!

Thereas May tried to sort out care home but it was a vote loser.

It was difficult for them to abolish IHT in the last parliament because Rishi was very wealthy and it would have been an easy win for Labour to target that.

Now that she has done this to pensions, it is in the public's focus so hopefully they will pledge to do it.

If I'd amassed so much wealth in my life that I'd be leaving my kids a few hundred thousand, plus a bit to the nation that educated and cared for me I would be so damn proud

Honestly if you'd told me 10 years ago I would be in the territory I would've assumed it was because of a lottery win.

Maybe we should stop paying our life insurance premiums and save for a holiday 😂

I don't disagree that we collectively need to pay more for public services, and wealth should be taxed. Just didn't think I'd be potentially in that bracket!

I’d far rather they unfroze the income tax bands tbh.

Is this rage-bating? You think we collectively need to pay more tax, just not your kids

We expect to pay inheritance tax on our parents' estates and I imagine one day our children will too.

I've zero issues with that, inherited wealth is one of the biggest drivers of inequality and taxing it is a good way to mitigate that.

If we both went under a bus tomorrow, our DDs would have generous death in service benefits and our mortgage would be paid off. Even if it was all taxed it would be plenty to raise them.