Would you leave UK if Reeves starts taxing wealth

[Movingmarble]

Just that really. Wondering if anyone else considering it. DCs both at Uni in next year. We had thought of living abroad a few months each year anyway but now UK is getting worse and worse for tax. Not super wealthy but millionaires on paper and with various investments. Been to advisor and would have IHT bill of £1 mill + if we stayed which makes me so angry. Worked hard for so many years to provide for our family and feels too harsh.
Spoke to our eldest about this and she even said so many of her friends have parents who have moved abroad in last few years. We are lucky we have options for countries, feels hard but then a flight is actually fast than driving up and down to where DC are at Uni so makes me wonder.....

Feel so fed up the constant threats to those who have saved for future and not got into debt through spending on material things or holidays, tech etc etc....

@Movingmarble well you may have worked for your wealth I don’t doubt that at all, but YOU won’t be taxed on it as you’ll be dead by then. If I had to pay IHT on inherited wealth above the threshold for doing Nothing but from good fortune of being an offspring, I should not grudge this tax as I have not earned it. I think tax on earnings should not be higher than income luckily falling a beneficiary. So that is where I think unfairness lies.

How on earth would wealth tax on a house work?

You stick it on a house if one half of a married couple dies. The remaining person is allowed to stay and the government gets first dibs on the tax owed when the other person dies BUT - what about care home fees, what if the person just spends the money perhaps on medical bills because they cannot wait for the floundering NHS to treat them. What if the house had had £500k spent on it and was a shell before someone moved in. What about any remaining mortgage. What about life time gifts?

I gave both my sons £2k for Xmas and Birthday plus paid for them to go on a luxury holiday when I cashed in my 25% pension lump sum. Is that included?

Labour are taxing everything that isnt nailed down and not addressing the two big issues in the room.

Triple Lock on Pensions
The spiralling benefits bill

And what jobsworth will be valuing a house? If the limit is £1.5m then there will be a lot of houses at £1,499. What is a valuation is given and the house is sold for less.

What about appeals on valuation??

Yes.
Brexit - huge mistake pushed by politicians with their own agenda, aka Farage and Johnson, who have never been made to answer for it.
Now Labour hit the small business owner to the point they stopped hiring and growth faltered. Then all the bad publicity about inheritance, wealth and property taxes means that many “averagely wealthy” have already left.
The failure to even consider the reform of the welfare state and how it has accelerated in the past 7-10 years has killed all talk of “broadest shoulders” as it’s clear it’s the only shoulders soon to be impacted.
I’ve always liked the UK but it is getting poorer and we can’t accept our new circumstances.

I’m not planning to move but am planning to stop working earlier than intended because I’m sick of working hard to fund everyone else.

I’ll live off my savings and stop paying tax like a mug.

We have discussed temporarily moving offices (probably US) for the time that Reform are in power, if Reform are in power, both teens will be at uni come next General Election.

Would sell primary residence, that money would be ringfenced for the teen's spring into adulthood. We then have a smaller, but adequate property that is being rented out, nice retirement property in a decent area, so ideal really, wait for a break in tenancy and use that as primary residence.

So not move permanently but possibly, for 4/5 years or so.

And of course move pension investments around so they can ride the financial storm.

dreamingbohemian alternative is to overhaul welfare system and get people into work not just being able to claim benefits. Totally agree there are those unable to work but listen to radio shows and often people admitting they could work but easier to claim state benefits. Yes that makes me cross.

Make iht fairer. Then fewer would consider leaving. Not saying I wouldn't pay anything but 40% is unfair.
If Reeves targets pensions and tax on houses how is that fair. We could have rented but chose to save up and get a mortgage. My parents know others who spent money on cars, holidays, then rented and got all their care home fees paid as had savings under the threshold while people they know had to sell the house they worked and saved for. Different argument but again highlights how those who chose to save and not spend and targeted.
Agree with others about retiring early and not supporting others. Don't blame you at all. We have.

May I ask why the US in that case? Surely moving to a place where Trump and Vance are in power is worse than Farage? Farage is no where near as dangerous, although admittedly there are other worse people behind the scenes in Reform. Trump has promised a lot of things financially in the US and hasn't achieved them, from the data so far, in fact some areas are really struggling.

We worked "hard" and then it comes out that much of the wealth is because they bought a house in London at the right time. I bet she tells her cleaner they should also have bought a house 20 years ago

Where did you live while you were saving up for your mortgage?

Also - are you married OP? 😂

We lived in rented accommodation. Yes married. Started by saying if one of us dies the other inherits so thought was implied.

Totally wrong.
IHT is paid by the surviving family. It is a tax on their one off income.
There is only wealth and growth in a country when people are able to spend.
We are not all equal in terms of ability or success or finances, or even what those terms mean to us. We never will be. The 'wealthy' as you choose to call them have no issue paying tax, they do have an issue being taxed for breathing when the 'wealth' they are creating and have created is of far more significant value to the country than it being handed over in the form of tax.

So if one of you dies and leaves everything to the other like you said, you won’t owe £1m. You will owe nothing. Because there is no IHT between spouses.

Personally- if there HAS to be IHT then I would say it should be set at 10% for all estates over £10k. It's small enough that people won't be that bothered to try and avoid it. It keeps money into the hands of aging people so it can be used for care home fees etc if they need as they are less worried about handing it out to family before it's too late.

You only have to look at the Laffer curve principle. When taxes are high the tax intake is relatively smaller because people do what they can to keep as much of their own money as they possibly can. When Thatcher reduced the top rate of tax, the total tax intake went up, for example.

**Also- it's a myth that only rich people pay IHT. The Nil-rate band has not risen with inflation so more and more estates are drawn in. In addition- ALL estates are subject to IHT. It's just that under a certain threshold there is a nil-rate band, of 0%. But the tax is applied. That means that any government- pretty much at will- can raise a nil-rate band to 1% or above should they decide to do so. People never seem to understand that. All estates are vulnerable, no matter what.

It just may not be applied to yours - yet.

anniegun 😂 to sorry ti disappoint but no cleaner here.....or nanny or driver.

@Movingmarble I think most benefits paid out are for those in work? So effectively the state subsidises company profits and high salaries for some? because said companies pay such low wages that they aren’t sufficient to live on thst their employees need to claim benefits. But no one seems to think of it like that.

Also how many high earners have benefited from reduced tax - even keeping themselves into lower tax bands - by salary sacrifice or pension contributions? I wonder how much is lost from tax coffers from these things. But yes, bash those who cannot get a job or pensioners. And for those who could work - maybe we should be looking at why employers might not choose to employ them, can’t force them.

If you don’t want to pay tax to support uk public services then you should leave but make sure you surrender your passport before you go. If the wealthy actually paid their taxes then we wouldn’t have the deficit we have now.

So you didn't choose to buy instead of rent... you saved while renting in London? Your story isn't adding up.

The top 10% of earners pay 60% of income tax.

It's low earners who pay no tax, and just take, take, take.

Quite.

@dreamingbohemian Run the services better! Plenty of doctors are wealthy. We don’t use our wealth appropriately or make sure it’s targeted at those most in need. Labour know this but also won’t face down the backlash of their own if they reform anything. The awful fact is, this will let in Reform.

”Make iht fairer. Then fewer would consider leaving. Not saying I wouldn't pay anything but 40% is unfair”

But it’s not 40% on the whole lot is it!

We are looking at moving to Italy. Annual tax lump sum to pay and nothing else, cheap flights back and forth. I never thought it would come to this but the tax bill is just getting ridiculous now, and we have always paid it without seeking loopholes but it comes to a point where it’s just too high a percentage.

No I wouldn’t move. If DH and I went under a bus tomorrow we’d pay about £500K in IHT, but we won’t care because a) we will be dead and b) our children will still inherit over £1.5m for doing absolutely nothing. They didn’t ‘work hard for it’.

In reality I intend to spend the majority of it before we die, so they’ll just end up with the house (poor lambs) and there won’t be much of an IHT bill at all.

@BlindSpotForCats

Personally- if there HAS to be IHT then I would say it should be set at 10% for all estates over £10k. It's small enough that people won't be that bothered to try and avoid it. It keeps money into the hands of aging people so it can be used for care home fees etc if they need as they are less worried about handing it out to family before it's too late. You only have to look at the Laffer curve principle. When taxes are high the tax intake is relatively smaller because people do what they can to keep as much of their own money as they possibly can. When Thatcher reduced the top rate of tax, the total tax intake went up, for example

Nail on the head. I've said similar on here in other threads many times. We need to remove the perceived "need" for legal tax avoidance, and to achieve that we need "fair" taxation. A lower rate of IHT starting at a lower threshold would generate far more revenue because people wouldn't feel the need to take drastic steps to avoid it. Big "cliff edges" always cause adverse human behaviour.

I saw it a year ago with Reeve's IHT hike re pensions, business asset relief, etc. I was insanely busy with clients wanting consultations to review their new/proposed IHT liabilities and working with IFA's and solicitors to set up trusts etc. Many of these were people who'd never given much thought to IHT as they knew their potential IHT liabilities were pretty low. The changes she proposed caused lots of clients to have huge IHT liabilities, so they were suddenly interested/invested in reducing/eliminating the tax so made changes to wills, set up trusts, started making lifetime gifts, changed ownership structures of businesses, etc., the end result meaning NO IHT due on their deaths, where prior to Reeve's idiotic changes, there'd have been relatively modest IHT liabilities which weren't worth spending thousands on professional fees to avoid! One client's IHT went from a few thousand to nearly £100k due to a combination of the pension/business asset changes - they changed things around and now HMRC will get zilch, but the solicitor/IFA got a few thousand instead to re-organise their estates!

We need to get rid of cliff edges and stupid thresholds, and make the "curve" of taxes due at all income/gain/inheritance levels to be a gently curving upward line/curve so that there are no points at all at which point the taxpayer will think "sod that" I'm going to do something about it. Take away the cliff edges and stupidly high marginal tax liabilities and more people will just accept the tax, even moreso if it's set at a sensible low percentage.

Politicians are hopeless when thinking about human behaviour. We saw a classic example when Brown reduced tax for small limited companies but didn't for sole traders/partnerships, which caused a stampede of small businesses and freelancers converting to limited companies! Doh!! Even his paymaster general stood in Parliament and said she didn't think sole traders etc would incorporate and convert to Limited companies "just to save tax" - what planet was she on!!