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.

I don’t know if I agree with you or not but I don’t think anyone can be a good wealth manager unless they have some empathy with their clients.

It's not a nice problem to have and many people will now be caught by it due to pensions being included in the estate. Someone who has been on 25-30k all their working life can get caught out by that one if their pension pot did well and they don't take it or a lot of it.

I disagree whole heartedly with inheritance tax, your making people pay upfront often before probate is finalised whilst they are still grieving and they have to find that money often before getting anything.

It used to be a tax on the mega wealthy now it's just a tax on majority of people who worked their lives and have a property and a pension.

Yes they could at least wait til you've sold the house.

This. I’d like inheritance abolished completely. Everything goes back into the mutual society pot.

So the only tax anyone would pay would be income tax?
No tax on eg smoking?

Every tax we pay is double taxation.

I disagree whole heartedly with inheritance tax, your making people pay upfront often before probate is finalised whilst they are still grieving and they have to find that money often before getting anything

The tax is fine, it's the timing of paying it that needs reform.

The majority?! You do know only 4% of estates annually are subject to inheritance tax? 😂

If only the Govt that was in power for 14 years had done something!!! People need to seek advice as to what to gift and what their beneficiaries may be liable for. All the advice the people who have money use is there for everyone else. I agree the 6 month time limit after death is stupid but our elected MPs have the power to change that.

Currently it's 4% you might want to read the rules around pensions being included in estate values from 2027. With civil service/NHS/police legacy pensions that's likely to add significantly to that. So it's definitely not going to stay at 4%.

How can they get caught out if they’re dead? They’re dead.

Many don’t seem to even know what the IHT thresholds are.

You see a lot of “I’d rather have my parents here than 1m” but nobody lives forever & everyone loses their parents. Not everyone gets 1m though.

Yes agree with both of you.

On a related note, if people want to keep IHT, then a fairer system would be to tax it on the income/wealth of the beneficiaries

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.

Because lots of people are thick.

Good! Unearned wealth should be taxed. But it still will only ever affect a privileged minority. DB pensions haven’t been available for decades.

With civil service/NHS/police legacy pensions that's likely to add significantly to that. So it's definitely not going to stay at 4%.

Aren’t they defined benefit schemes?

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

You can pass on 500k to a child per parent.

It adds stress to someone who is terminally ill or elderly before they die many people don't want to burden their loved ones with a tax bill to be paid 6 months after death. Or trying to sort it out in advance for family.

It then adds a huge amount of stress to the family left of finding the money to pay it.

People seem to be under the impression it's just the wealthy reality is if you own a house at say 200k (so quite a cheap house for most parts of the country) and from 2027 have worked all your life but have a pension pot which has over 150k in (which most pension pots will over the course of 40 years working) and that person is divorced or single then they would fall into the thresholds before you have considered if they have savings. That's not the mega rich or only the wealthy in expensive houses that's standard working people.

It's not unearned. However if your concern is about wealth privilege then why change IHT so it's taxed on the wealth/income of the beneficiaries @Ratisshortforratthew ?

Re privileged minority. If you mean the richest, they don't tend to pay inheritance tax. They can afford legal avoidance (or significant reduction) schemes.

Yes bur they have spousal pension or under 25s if in education (under 18 if not) so can be passed on in those circumstances.

How would that work?

I die, my house goes bank into the “mutual society pot”, along with my ISA’s, pensions and any savings.

where does that leave my partner and kids?

sahm’s? Don’t inherit from their husbands, so what, back to work?

orphaned kids? Are they left with no home and no inheritance?

I plan to spend most of my assets before I go when my kids are independent. If I don’t, I have amassed a reasonable amount of property and assets that my partner (life interest) and kids should not have to worry about keeping themselves afloat, paying their uni fees etc. all the stuff I would pay for if I was still here.

No you can’t.

you can pass on up to 175k extra if it comes from property, so total 500k including property value. To immediate family only (spouse, kids etc).

if there’s no property it’s 325k.

The changes impact DC pension more than DB ones though.

@Whatamitodonow the post I replied to mentioned property….

But Im sure the 500k is applied to the whole estate so the house doesn’t have to be worth 500k plus for the exception?

if there’s no property it’s 325k.

Missed you said no property. Very few people have assets over 325k not linked to property though.