What do you think of Burnham's plans re inheritance tax?

[JoyousOpalLemur]

He has said in the past that he wants to abolish inheritance tax and replaced it with a social care levy on inherited assets, which will incorporate unused pensions.

I don't totally understand this if I'm honest - I think it means everyone will be dragged into the inheritance tax threshold, but it seems like a fairer tax than what currently exists, and it's there for a purpose (to fund social care).

What do you think?

https://www.independent.co.uk/money/burnham-prime-minister-money-taxes-mortgages-bonds-stamp-duty-b3001078.html

and like @DeftWaspI would have to sell any inherited property to pay for it but I would have do that anyway for IHT.

I own my home, which is also my business premises as Joint Tenants with my mother, when she dies I automatically inherit her share of the property, currently below the threshold, but under the proposals I have to find £20K to stay in my home.

I also own as the remainderman, my grandmothers cottage, which is let out, but under the law as my mother has a life interest its counted as her estate, another £20K to find

Its me who will have to find the £40k, with nothing other than my home and another families home to choose between - I have to pay tax just to stay put and keep the cottage, which is my only pension, which under the current system is tax free.

So unless they retain the pay over 10 years scheme, I will be forced to evict the tenants and sell - a home of 16 years lost to decent people.

Either that or sell my very modest home, where I cared for my dad through his entire 7 year journey with dementia and care for my frail disabled mum - in which case I'd have to shut down my business.

These things hit the living not the dead.

Why would your home be taxed if you are still alive v
If tenants have to leave because a tax bill has to be paid that’s no different to what current IHT estates have to deal with. Your benefactors can always borrow and defer the bill for 20 years

Yes you will
but this is no different to what currently happens to those who have to pay IHT
and a lot of those won’t have another property to sell. They have to borrow, pay interest and then sell it eventually
In your case having a rental puts you in a better position than most.

If your relative with the cottage had to go into a care home under the current system every penny would be gone had you not set up a trust to avoid those fees.

Now everyone pays 10% assuming everyone doesnt rush out to avoid it with similar planning.

Unless of course you are completely against all IHT for everyone irrespective of wealth. In which case no one pays anything, care places are free and so everyone’s equal. Fair enough

That trust was set up in 1984, when I was 5, it, at that time had the small property plus £400K under the trusteeship of a large bank, they ate through all of the £400K, so it was hardly a great idea.
It was set up by a grandparent who hated my dad, not to evade anything, and it still doesn't.
If it comes to pass I'll blow the lot and live out my days on the social, I'm registered disabled although have never claimed a penny, looked after my parents, saved a small fortune to the state in fees, run a little business, honestly, why should I give a fuck, what's the point.

But that's exactly what's happening now with people leaving in more expensive areas and inheriting family homes above nil band. The difference is that they have to pay 40% tax, not 10%.
Do you feel any sympathy for them? because it's their taxes pay for your family care. And they are not entitled to this state provided care because they have these assets.

Of course, 40% is daylight robbery!

My parents have never had care provided by anyone but myself, we have never used, and will never use the system,

Classic.

Out of curiosity - did you vote Labour in 2024? were happy for private schools VAT, mansion tax, tax the rich, etc? and suddenly they are coming after you?

Whilst it may not have been set up to evade anything
It does

A 10% IHT to pay for everyone’s care is a better solution than the current one and you may benefit from that one day. Saving your estate far more.

No, I didn't vote Labour, because I know what they stand for.

Or you pay 40k on a mortgage- and carry on getting the income from your tenants and own 2 houses?

can you not see that 2 houses for 40k, including one giving you a passive income is a good deal?

I don't borrow money, I have never borrowed from anyone and never will, not on a credit card, mortgage loan, whatever.

If there is a debt to be settled it will have to be settled by selling an asset.

Yes sell
Just like everyone else has to do.
It’s not a new concept

Or my beneficiaries sell if I decide to leave with mum, which is my preferred option when the time comes.

What ever way you want to play it
That's your choice

So sell it. Like others have to.
you have more choices than many - and will still have a free house over.

abd however much else was in the bank and estate, plus the rest of the value of the house.

Were you expecting sympathy?

No, not particularly, I'm just pointing out that its grieving families who have to settle these demands at the worst times of their lives - not the dead, who are alas gone.

And many of us have lives intertwined with those loved ones and will be hard impacted if this comes to pass, farmers again may be having to find cash that just does not exist.

The current system allows for modest estates to be passed on, you could even scale it back, and still keep most modest estates free of tax.

I don't think anyone will be happy when their gift, however small is hammered with a 10% levy - and if you think, even for a moment that it will give better or free care, you are mad, it will be pissed up the wall with the rest of our taxes and little improvement will be seen.

@DeftWaspbut most people don’t live with their parents and rely on an inheritance for their pension.

I potentially will have to pay 40% IHT tax pending any care costs as my parents house is now ££££. I don’t begrudge it though.

Yes, fair enough that the pil spent everything on care. I get that. No one was up to caring for them so their assets covered the cost.

BUT in the next identical room with identical care was Muriel who was paying absolutely f-all.

In a real-world example my granny was in a care home, paying her very modest pension in fees. My grandfather had always worked and served in two world wars (Battle of the Somme no less and lost his 17-year-old brother). In the same care home was the local “lady of the night” who had lived a colourful life - cars, furs, jewels… she wasn’t paying a penny.

Farmers can and should be passing on their farm before they become old/die. Farming is a business. A very important business but a business none the less. Successful family farms require succession planning and conversations about who will continue the business and in what role going forward. Just as other family businesses (legitimately) manage to avoid paying 40% inheritance tax on the death of the founder. Businesses that don't are often likely to fail anyway due to problematic practices/dynamics (IE the older owner running it like his/her personal fiefdom, refusing to cede control,.relying on family members for labour on vague promises if a future stake, avoiding discussions of the future because noone wants to admit the younger members don't want to take the business over etc etc). If these practices are a bad idea in a family run shoe factory, they aren't a good idea in a family run farming business.

Family businesses just point blank refusing to consider succession planning for their own idiosyncratic reasons are within their rights to do so. But it's not reasonable to expect the government to cater to those quirky decisions when planning national taxes.

I don’t really get the angst over someone getting something for free? Is it a generational thing? I have never needed social housing but it didn’t stop me getting a mortgage. I stopped at 2 dc as couldn’t afford more and do not get any benefits, I still work despite X down the road having 4 dc and not working. I save into a pension despite others not doing so etc etc

Tbf furimosa when I read threads on here I think I must live on another planet.

nobody on here saves less than 2k a month. Nobody has car finance. Everyone owns their homes outright by their early 40s.

anyone not living the same fiscal life is frowned upon and judged.
I would much rather enjoy my earnings than put hundreds of thousands away for a future that is not guaranteed.

and don’t begrudge ‘the lady of the night’ getting some dignity in ageing.

Going by this thread and others just on here the majority think it’s fair

Everyone is sad when people die. Death is sad. It doesn’t mean you get to get two free houses and a passive income from one. Do you think people who rent are not sad when they lose a loved one?