Does anyone else think that having to pay tax after you are dead is quite a nice ‘problem’ to have.

[Daisydurrbridge]

I am like most people and will never have the ‘problem’ of paying inheritance tax. So many people are fussing and fretting about this tax without a true understanding of the terms under which it will have to be paid.

In my working life, I often had customers complaining about interest rate falls because they had to live on that money. I am not referring to ordinary people but those who needed wealth management advice. The thought that they could spend some of their capital filled them with dread. Only having three cruises a year type of worry.

Once when we were at dinner with friends they were discussing their parents and they remarked a time when they were really quite poor and had to live on their capital. When I said “quite poor” means having no capital they could not comprehend it.

i wonder if I am so out of step.

Yeah my friend once regaled a story about her parents being so poor when she was a child they nearly had to sell their second home
I don't even have a second pair of shoes as a child never mind second home.

If your job is advising people on wealth management, it's fine for them to express their thoughts on interest rates to you. Imagine having a wealth manager who told you just to live on your capital, hope for the best and stop grumbling 😭

No, I’d rather a fairer tax system. Don’t pay tax twice.

my issue is my house may be worth 500-700k in London. Bought 30 years ago.

if I die unexpectedly my dc have to pay IHT they will likely have to sell their home (currently teenagers). You can’t sell a 3 bed flat in London, pay IHT, and have enough left for a 3 bed place in the same area.

so they’ll have to move area, schools, eldest is at uni nearby, and completely disrupt their lives at a time they are grieving. If my pensions are taxed too then they will struggle to support themselves, even with family help.

so yes, in one way it’s a “nice” problem to have. But there are many single parent families with homes that would be over the IHT value.

same if you’re not married to your partner. The allowance will be 500k and chances are your family could be homeless.

I agree with the principle of inheritance tax, just think it needs reform. Far too many loopholes, reduce those for maybe other than your main residence (where someone else could well be living in), and the rate could be much lower.

Of course I did not put my thought into words. I am very good at nodding and smiling. What I did notice was a remarkable difference in those who embraced their wealth and enjoyed it compared to those who thought their money was there only to make more.

i know how my post makes me sound but I am of the generation where inheritance meant granny’s old teapot.

All of this.....plus the fact that in order to be paying the tax, they would have lost their parents.

Calling it 'quite a nice problem' is deeply unpleasant.

Brings to mind those threads by the woman who is envious of her partner's daughter having nice things bought for her, and an inheritance after her mother died when she was 12.

I actually think I disagree with the whole thing.

Sounds like you're in the wrong job. Judging your clients for expressing financial concerns to the person they're paying for financial advice- words fail me.

My issue is that virtually all the money ‘we have’ is tied up in our house. People who are really rich can invest their money off shore and avoid IHT. We have had to take out an insurance policy that will pay the IHT when we die.

I’m probably being a bit dim here but I don’t understand why this whole “getting taxed twice” argument gets trotted out all the time.

1. The person who has died isn’t getting taxed again, the beneficiaries are getting taxed on the receipt of the estate, for the first time.
2. A huge amount of the estate’s value may never have been taxed at all if it has increased in value since the deceased purchased it (eg property)
3. Paying tax twice - don’t we all do that when we buy anything that has VAT applied?

I will be paying a CGT bill next year after selling some shares I bought with my post-tax income. Is that paying tax twice? Is that a good enough reason not to pay the CGT?

I don’t get it.

But yes I agree with you, OP. All the arguments about why it’s “not fair” or “not affordable” or “we’re asset rich, but cash poor” are really out of touch with the millions of people in this country who have nothing by way of cash nor other assets and never will. There appears to be no humility amongst those who complain.

Couldn’t agree more with this. The whole taxed twice argument is so flawed it isn’t an argument.

All money is taxed twice based on this logic.

When I said a nice problem, I meant for the deceased not their heirs. I think that a worse problem would be if your death caused them tto suffer sever financial hardship. Hardly likely if you are leaving enough for inheritance tax to be paid. As far as spending capital, I think most relatives would want the money spent on making life easier for their parents in their old age.

Giving up a quality of life, possibly care or health needs is something I see quite a bit Children trying to get their parents to spend money on their own needs can be quite battle.

The rights and wrongs of inheritance tax is not the issue.

Because it’s a neat thing to say that sounds clever if you haven’t thought about it. As you say - we get ‘taxed twice’ all the time. People that make this point are being ridiculous. What if I’ve paid income tax on money I am spending but someone else has not. Does that mean I should get my goods vat free but someone else (who perhaps has not breached the incone tax threshold) should have to pay vat? Unfortunately it sounds reasonable so people repeat it.

This seems to have become a common (dim-witted) reason to call for IHT to go. It seems to be rooted in the idea that huge estates that pay tax (usually over £1m) are made up of carefully scrimped and saved bits from the wages of hard-working people who have already paid income tax on the money.

In fact very often most of the value of an estate is made up of huge untaxed gains from housing (and often other investments).

Even ignoring this, the IHT burden does not fall on the person who paid the first round of tax. They're dead! It falls on the beneficiary who gets a windfall on which they've certainly never paid tax. (In fact technically it's the estate, and the same logic applies there, but it's the beneficiaries' money which gets reduced because of tax.)

And if you're still complaining and somehow imagining that each pound in the economy should only be taxed once, and should then be able to be passed around between people in some sort of tax-free force field, that's never the case. I pay income tax on my wages. I spend them at the shop and pay VAT. The shop makes a profit on the transaction and pays corporation tax on it. It uses its profits to pay dividends to shareholders who pay income tax on that money. Which they use to buy things from another shop ...

My parents are asset and cash rich, and are immensely frugal. They've been thrown for a loop by the closing of the exemption for pensions.

Thing is, we'd like them to enjoy their money more. And selfishly, we'd enjoy being hosted better when we're there!

Instead, we are huddled up cold in a house they can afford to heat better, eating food they KNOW we don't like because it's 45p less than the preferred option, whilst they fret about whether or not we receive all of the money they're saving for us after their death.

My financial planning is around making sure I enjoy my life, my son enjoys his childhood, that we can afford to dispense some cash to help him out at key points in his life, and that we have enough to live well in retirement.

That's wonderful by itself, anything he gets when I die is a bonus.

I agree with this 100%. It was what I have been trying to say and I glad someone with better articulation has expressed it.

A lot of people seem to worry about it when it won't impact thier estate anyway. However, I do think fiscal drag could mean more and more people pay.

The main issue for me is one of the biggest motivators people have is ensuring their own children are ok, and people are happy to make sacrifices when younger, to build up asssets for thier own use, if they know they can pass them on if they dint use it all. If they can't do that, people feel less inclined to save up in the first place or or make less attempt to be frugal, so you risk more people needing state support at the end.

But in the flip side, the social care bill is huge so someone has to pay.

You have to pay IHT on anything above 325,000.

How is this fair to have this as a baseline number that applies to all?

My brother has a 5 bed house which cost him 209,000. I have a 2 bed flat which is worth 390,000. This is unfair to start with.

Where's the problem? Your heirs will get more money and they'll pay more tax!

In June 2024 the average house price in the UK was 288,000 .

In your case it would be worth taking out a life insurance policy to cover it. These are available and may not be too expensive if you limit the term just until your children are independent and you're not too old.

Also I believe it needs to be paid upfront or maybe this has changed

It's a problem for many.

People who've worked hard, paid tax and saved wanting to secure the future if their descendants. Maybe pay for an education for their grandchildren that they couldn't have afforded for their own children. Or give them secure houses when they themselves grew up in one room.

It's very worrying for some, it's sad you can't understand that.