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.

The threshold has not been increased since 2006. Agree it should be linked to inflation.

Not if you take out enough life insurance to cover any IHT charges.
That’s what most people do with DC that are not financially independent, they pay for life insurance. Life insurance isn’t taxable.

If they want to raise more from IHT wouldn't it make more sense to lower the thresholds but take a smaller %, more people would pay it but a smaller percentage?

You’re forgetting the Nil Rate for Primary Residence that says first £175k of your home doesn’t count towards the £325k threshold. It essentially raises the threshold to £500k for IHT if you leave it to a child or grandchild.

Is it 1 million if property was owned by husband and wife

Is that the confusion

Some parts of our inheritance tax system are definitely wrong in my eyes. Such as the whole gifts rules to avoid a deprivation of assets situation. As far as I'm aware, someone who dies suddenly, before old age, has the same gift rules applied to them as someone who dies when they're 80. I'm happy to be corrected.

Does that mean that someone who is executor for someone who dies suddenly in their 50s has to list every financial gift to eg their adult children in the past 7 years. A person that age may well have paid/being paying a lot towards university fees or loans, student accommodation, deposits on flats or houses, started a savings account for a new grandchild etc etc. To me this is totally different to someone age 75 who starts giving away their savings by gifting sums to their adult children with the sole purpose to try to avoid the taxman getting it. And why is the annual gift limit only £3k anyway? That's fucking peanuts these days, would hardly buy you anything. Why has that not been increased inline with inflation too?

We know that people are not saving enough for retirement in which the taxpayer/state has to pick up the slack. So why put some people off saving into their pension by taxing? And reduce the inheritors capacity to pay for themselves? Surely if you have sympathy for poorer people you'd want more money in the pot for them? I feel the new pension and farm iht is like the independent school vat thing where it will actually cost more but philosophically Labour don't like people being self sufficient , they want us all dependent on their largesse (even though its not their money).

God yes. I'd be fucked off at that. So unprofessional.

OP, with all due respect, if you are struggling with the idea that some people have assets that they have built up over a long period of time and would now like financial help to manage, you are probably in the wrong job. The budget has impacted me significantly in relation to my pension management. I'm just moving into flexible retirement but need to ensure my DC with learning needs are protected, as their ability to earn and be financially independent is limited. I wanted to manage on a smaller income which of course will be taxable, and gift them the pension asset. It was to have the flexibility to use my pension pot in different ways that was appealing. My new pensions adviser has some thoughts so more to think about.

Just a note for those still paying into pensions. Trying to cash them in is so much more complicated than ever I realised. I worked for several different organisations and have several small pots. So start planning early!

I just fundamentally don’t agree with intergenerational wealth transfer. It should go back into housing and infrastructure to level the playing field. So yes, I do want to tax the beneficiaries, and ideally I’d tax 100% of it. My parents’ estate is well below the IHT threshold but I believe so strongly in the principle that I’ve requested they leave it all to well-researched charities tackling poverty and inequality instead of me.

Does that mean that someone who is executor for someone who dies suddenly in their 50s has to list every financial gift to eg their adult children in the past 7 years. A person that age may well have paid/being paying a lot towards university fees or loans, student accommodation, deposits on flats or houses, started a savings account for a new grandchild etc etc.

Most of this is IHT exempt. Payments for education including accomodation & living expenses are exempt. Regular payments to savings accounts - exempt if it is out of regular income and doesn’t deprive the giver of usual life style. A deposit on flat or house would not be exempt afaik.

If the OP is actually a wealth manager I’m Rachel Reeves

And I have your earnings from this month please. Why not? They don’t belong to you.

I agree. It has already been taxed when you generated it. Then you save it to provide for your Dc and it gets a second whack. It discourages people from saving and providing for the next generation, which surely takes a burden off the state.

Its kind of race to the bottom psychology to discourage society from earning and saving.

The treasury have already said that pension pots coming into IHT will affect 8% of estates.

That will be mostly from DC pensions though.

So that is a doubling of estates that will pay IHT. The number will actually increase every year due to threshold being frozen.

How does a wealth manager not understand the economy? The reliefs that have been cut weren’t for the farmers, or the business owners. It’s because breaking up businesses to get some liquid cash to pay tax is bad for the economy.

I hope you have someone who can spell writing your reports.

My quote was about people complaining that they have only have two cruises instead of 3. We are talking about being out of the country for 4 months instead of 5.The choice is watch your 3 million continue to grow or spend the money on another cruise. You can’t do both. Of course I did not say any of that to the client. My role is to make the money work for them in the way that gives them the most pleasure, the best return and the most security. I do not pull my punches and give them honest information about the consequences of their choices.

Absolutely. This will impact anyone with a decent pension. But aren't the govt DB schemes exempt? I thought i read something to that effect. So this change was to impact private sector DC schemes. Which of course I have contributed towards through my own contributions. I'm cross because the general population need to be encouraged to save for their own future. I'm not even sure my DC will get a state pension. So anything that detracts from that is not good. Pensions should be a lifelong project.

Yes, they still are in the state and quasi-state sector. Local govt pension schemes - all school support staff

Have you heard of life insurance? Held in Trust?
Solved.

It's impossibly to only pay tax once. Because surely you pay income tax, and then you pay value-added tax on things you buy, and you pay council tax. Or you invest your money after you pay income tax, and then eventually you pay capital gains tax on the shares/asset. in what scenario or country do you only pay tax once?

Yes, an executor should be checking through the last 7 years of bank statements for gifts. Whether they die suddenly, and irregardless of age.

if they have been paying for university, savings accounts etc because they can afford to, then this is considered as “out of income” and is exempt from IHT.

if I earn 50k, and pay my dc’s uni hall fees leaving me 40k, which I can live on comfortably, then that is out of income and is exempt.

if I cash in all my ISA’s and pay off their 50k student loan, then that clearly isn’t out of my income and is included in the IHT pot.

IHT is nothing to do with deprivation of assets. That’s a completely different issue where someone who knows they are going to need care gives away their assets in an attempt to force the LA to pay for their care instead.

the annual gift limit is 3k taxable. So in my example above if I give dc 50k for their loans, only 47k is used for IHT calculations. However if I then live for 7 years after their gift, it is no longer included for IHT. So you can actually give as much as you want, you just have to make sure you don’t die anytime soon 😂.

For what it's worth, my financial planning revolves around a diversified selection of options that pay out at roughly ten year intervals (or can be reinvested etc).

However, although it would be emotionally devastating, a 18yo with £325k even before any tax would be in a very fortunate financial position indeed.

I do agree that 6 months is far too short a time to process estates, however.

Ah a lovely Labour Bot.

Norway, most cantons in Switzerland ( spouses and children exempt), Australia, New Zealand. All countries with a great standard of living.

The point with paying VAT is it’s a choice. With interest on investments it’s just that: tax on the interest. The original sum does not get re-taxed.The interest is “ new money” and getting its first hit from tax in your hands.