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.

Nowhere have I claimed to be a Wealth Manager or work in the Wealth Management industry. I have referred to some of my clients who are wealthy enough to use a Wealth Manager.

Payments out of income don't count as 'gifts' under the 7yr rule.

I absolutely will. But as I explained above, because the IHT threshold barely covers residential property in the SE, then for peoole who live here that's a difficult balance to call.

If I lived somewhere with low enough housing costs that I could keep sufficient savings to pay for my late life care needs and a house I live in (like most of the rest of the UK can) then it would be much easier. And fairer: since people living everywhere else in the UK can do that.

Of course I could move, but why should I have to? If DD decides to settle down and have a family in the area she's grown up in then I'll want to stay here too.

Possibly not though - if you're leaving a house to your children, the inheritance tax threshold raises to £500,000 (and they're only taxed on any assets above the threshold).

The person who made the money and who has died is paying.

You don't get to steal someone's possessions just because they're dead.

The house children are living in can be taxed if their parents die forcing them out of their home at a time when they have lost their parents. Deciding to sell a few shares and having to pay CGT on the increase in value is nothing like the same thing.

If they want to tax home ownership maybe they should put CGT on house sales, spread the pain around a bit.

I wasn’t comparing the morals/ethics of orphans paying IHT to me paying CGT though, was I? I wasn’t saying “orphans should pay IHT because I have to pay CGT”, was I?

I was saying that the “shouldn’t pay tax twice” argument isn’t a valid reason to disagree with paying IHT.

Well, if you want that, then i'd suggest you look at higher taxed countries and their levels of inequality compared to the UK.

Isn't odd that since we've gone down the route of so called lower taxes - obviously they gone back up recently - our public services that allow our country to be sustainable for all, have got far worse, be it in Schools, Health, SENDS provision, environment.. all gone down hill for most people BUT for the very well off, they ve all got better, they can buy their way around the lack of provision.

If you want to leave money for your DD, you should gift to her now... as for working less and spending more time with her, please do that, once she is older, you'll regret you didn't - i'm making the assumption she is dependent on you.

It would make for a more affordable, equitable and supportive society for everyone if we were taxed more, particularly on inheritance.

If everything went back into society for housing and public services, people wouldn’t have to rely on inheritance because everything would be more affordable across the board. But many people don’t like the idea of their money benefiting anyone outside their immediate family, despite the fact their children would also benefit. It makes no sense to me. People also bemoan how the cost of housing and living has gone up so much they feel like they’re struggling on 6 figure salaries, but would never vote for socialist policies that would ease this in case someone else might benefit apart from them.

The shouldn’t pay twice argument is a straw man that seems to be a focus from those posters who support IHT.

The posters who don’t support IHT are arguing that it is capital that is being taken from the individual. Which is a completely different thing

I think this is where the whole inheritance question splits people. There are those that think the dead person no longer has any possessions . Others seem to think they still belong to the deceased. When emotive words like steal are used there can be no meeting of minds.

Well this has been largely pointed out previously but yes you’re wrong - a pension fund is deferred pay, 75% of which is taxable at the point of access.

And people on benefits often do pay pension contributions to keep within their benefit bands.

All salary sacrifice does is give the member a slight turn on national insurance that doesn’t exist if they make the pension scheme contribution themselves. It also saves you from having to claim it back through a tax return in some circumstances. It’s hardly a reason to pay into your pension

Generally, in order to be fair, the tax system tries to tax every 'new bit of value' once.

With CGT, you're paying tax for the first time on the 'new value' that comes from your asset appreciating. CGT should normally exclude inflation, which is why CGT is usually lower than income tax, to approximate the genuine increase in value of the asset (some countries charge the same rate as income tax but offset losses and inflation but it adds complexity).

Residential property is an anomaly. It probably should be subject to CGT, but that has side effects.

VAT isn’t really paying a second time on your taxed income. It's the tax due from the manufacturer taking some input materials and adding value to them, then selling the result at the higher price. That's why it's called 'Value Added tax'.

The collection mechanism is that the company collects the tax on their selling price, then the offsets the VAT they themselves paid on whatever they bought: that way when there's a multi-step manufacturing chain, each step only pays tax on their own 'value added'. It's quite clever, really.

So although the end-consumer sees the entire final VAT in their invoice, it's really a tax on the value created by each manufacturer.

Council tax and road tax are very obviously a way to collect funds for specific state-run services such that people using the service are paying most. That's not double taxation, just more fine-grained control over one part of taxation (instead of bundling it into an increased income-tax for all).

Companies are taxed multiple times. Maybe that's OK. Similar to progressive tax rates: not really fair, but morally preferred.

Yes same here. We aren't in London itself but in an area in the SE where our city houses rival London prices!

My interpretation of taxation and quality of life in different European countries is that what works is for everyone to pay tax, and everyone to benefit in proportion to what they have previously contributed.

The excessively redistributive nature of tax and benefits in the UK (I include the Conservatives in this - they too have fallen for the 'sharing is caring' false natrative), with little personal incentive to contribute, has led to a spiral of decreasing living standards for all.

I want a future UK for her which actually works well. I don't think that comes from taxing a small number of people yet more. That just accelerates our decline.

Thanks for your recommendation to spend more time with my DD now. I've been thinking a lot recently about how to live life well, and that's the direction I'm going.

Better the money goes directly to those in need then to organisations

If the UK had a supportive welfare benefits safety net and enough council housing for everyone in need, then maybe I'd be more inclined to your view. However currently it doesn't have this. It should though (and hopefully that will be the case sooner rather than later).

In the meantime, if IHT was taxed on the wealth/income of beneficiaries, then at least some of the people you say you want to help would get the help they need. It would also save the economy a lot of money because it would reduce the benefits bill - and it would reduce pressure on social housing (meaning more available for those who don't inherit anything).

To add, although I lean towards taxing IHT on a sliding percentage scale depending on the wealth/income of beneficiaries, I don't agree with your proposal of 100% IHT for anyone.

People should be allowed to gift to their children. They've worked hard and paid taxes throughout their lives - and depending on the area of UK they're in, their estate will often be only a modest home and a small pension. I admit I hope my children will be able to inherit from DH and me.

Same. We're in the SE too (and I have friends from London). Bog-standard, definitely not a mansion, house and relatively modest pensions.

It's not even as if everyone's adult DC from the SE can all just move away. Some can and want to, but the value of staying near family and support network, and of stable communities, is too often underestimated. Plus, if loads of people from the SE moved away, it would just spread the problem of house price inflation elsewhere.

100% IHT would also advantage the rich, who can afford financial and legal advice, create trusts etc so their heirs benefit.

we’d just make poor people poorer and the rich richer.

no one would buy a house, what’s the point. We’d have a variety of property consortiums who rent, and as above all the houses would come under the umbrella of a trust or limited company, the management and profit share could be passed on.

@Windchimesandsong You can make gifts to your children now - so what’s the problem?

They're young children.

@Windchimesandsong Put money into children’s trusts! Of course you can give them money if you have it to give. The sooner you do it, the more they get later. There’s some decent products out there.

Someone who had a good income but it required working away from home a lot, paid additional money into a pension after tax, and was then taxed on their pension. Isn't that taxing the same money twice?

Bought their house with after tax income and lived in it as their only residence. No second home. Will pay inheritance tax on it simply because the value of property has gone up in their lifetime.

The tax system isn't fair. The fabulously wealthy can afford a team finding every tax-efficient approach that's legal while an ever-increasing proportion of the middle class are earning enough to pay all the taxes while not enough to do a Jeremy Clarkson and buy a farm.

i’m thinking of remortgaging in the future if rates come down so I can gift it to the kids, bring the equity in the house down- less IHT.

There’ll be more equity release type products created to avoid IHT as well I’m betting.

There will be more equity release scams and scandals!