What's the problem with Inheritance Tax?

[QuickBrown]

Inheritance tax seems to be really unpopular among certain sections of society. Obviously people always object to any taxes, but it seems to me to be the absolute least worst tax, as the dead have no use for money.

Those who object to it or know others who do, can you explain a few things to me? Firstly is the the idea of your estate being taxed once you are dead that you object to? Or is it that you are due to inherit and this will reduce their estate? Or something else?
Also where do you stand politically on other inheritance, for example are you pro-aristicracy and inherited titles?
If you are worried about your own estate being reduced before your children get it, are you someone who has given a lot to your children financially in their adult years or do you expect them to make their own way in life?
Also if you have inherited significant sums, has this swayed your thinking?
I feel a bit out of step with other people's thinking here!

I have worked since the age of 16, and been taxed extensively in that time. I am working hard so that I have property - that I have fully paid for with my own hard earned money - to leave to my children when I am gone. Dammed if the taxman is going to steal money from my children when I'm gone!!! The government have no right to your property or savings - none at all. It's a bloody stealth tax. Luckily, with a good accountant it can be legally avoided, but there are a lot of hoops to jump through.

Why would you work for 40 odd years to pay for something just for the government to steal part of it? I'm not sure why anyone thinks it's a good idea.

Many people inhabit, though, so I think tax there is justified.

If I earn money, I pay income tax. If I save some of it, I pay tax on the interest. By the time I die and some money is left I’ve already paid tax on that money twice, and now they want to take a third bite of the money - that feels unfair to me! That’s the money I have left after tax, they shouldn’t then take more!

Because I work so I can leave things to my children; not everyone else’s.

Why tax assets that have been bought after tax has been paid?
That is stealing part of it's value.

Houses are, I think, generating a lot of the current angst - it will be a self correcting problem over coming decades as there’s simply no scope for the huge rises in values seen over the 80s and 90s.
A system where the difference between price paid for house (corrected for current day values) and current valuation, was the IHT system taxable figure, would overcome this, as this is the amount that has not yet been taxed. Might encourage older people to downsize too, as the IHT marginal would be much smaller.

It is NOTHING to do with titles/aristocracy!

My house is my house, paid for out of taxed earnings. My child has lived here since she was born. It is her family house. If I die, why should my child have to sell her own house to pay the tax man inheritance tax? How is it fair that she can't fully inherit the only house she has ever lived in?

But IHT is about the stuff that you didn't choose to give them.

Can't do a partial quote but I work to provide a standard of living for me now, and to enable me to support my growing children. Not so they can inherit my house when I die and they've hopefully already retired!

I get all the arguments about having worked hard and built up wealth through savings, and both earnings and savings having been taxed already.

However, in order to fund all the programmes and infrastructure that are considered essential, additional taxes have to be raised. There is no other way - we as a nation cannot borrow our way out of past insufficient funding of these vital services.

To my mind, raising taxes from a deceased person is infinitely preferable to increasing the tax burden on the living. In any event, to be liable for inheritance tax one’s estate would have to be way higher than most people’s.

Because people have already worked and paid taxes and then for the government to take 40% of that (over a certain amount) money that people chose to leave to their DC or whoever they choose is disgusting.

I have no issue with inheritance tax, but that is because if I have to pay tax, doing so when I am dead is preferable. I also have no skin in the game as won't inherit and don't have kids, so in the exceptionally unlikely event that I leave a taxable estate, I just don't care what happens to anything I have left.

I think only 4% of estates pay it in England. I’m sure most people who are up in arms about it probably won’t end up paying it!

I am likely to be affected because as it stands my dad’s estate will be over the threshold, especially with the recent change regarding pensions. I am still in favour of it. Seems far better and fairer that I pay tax on my share (likely 1/3) of the £1million+ I will inherit when he dies (which I have done nothing to earn) than have to pay more income tax on my income when I’m scraping by month to month. (And we are not actually poor!)

Plus, has he paid tax on it? His house was bought for about £110k 35 years ago and is now worth £700k. Did he earn that increase in value? He has a large pension, most of which exists because in his later years of work he had no mortgage to pay and no children to support so ploughed as much income as possible in to his pension tax free to avoid paying 40% tax.

Of course, if he needs a care home, much of this money may be gone by the time he dies anyway. But if it’s there for me and my siblings to inherit, I think taxing some of it will be fair.

I don't understand understand?

I genuinely think people find it so unfair because it is 40%. It's a huge amount to take. It was clearly designed to tax the super rich, but over the years it has expanded to homes that are far from stately. I think we should reduce it to say 20%, to match standard rate income tax, of everything over £100k. More people would pay it, but at a lower headline number.

I am not against inheritance tax, as the person inheriting has never paid any tax on it.

Just annoying to have to give so much of your money to the government in any scenario, and in the case of inheritance tax… it might be a very large number!

I’d rather my kids had it than HMRC.

I think the idea of a flat 10% inheritance tax for all is better than the 40% rate currently - at 10% the incentive to do something about it is far less.

At 40% I will be endeavouring to die with as little as possible - I’m already starting on that journey as a fairly young adult through investing in my children’s names rather than just keeping everything in my own.

I am already paying rates of up to 62% tax - the idea of that then being taxed again at 40%, argh!

Similar to CGT?
We tax assets as a form of wealth redistribution.

I’m yet to be convinced inheritance tax is a bad idea.

Although interestingly Norway / Sweden / Denmark have all scrapped their inheritance taxes now, and they are seen as very equal and progressive countries.

Those in the firing line for IHT in the UK will pay not dissimilar tax rates to those in these countries.

Didn’t you work hard to buy a property to live in though, rather than to pass onto your children?

A low % of estates actually incur IHT but for those that do.. all tax is ‘unfair’ in that it it taking money for no other reason than the state needs it to run the country. If it is not taken after you die they’d have to take more while you are alive which is problematic too.

Very few people are net contributors to society anyway. We generally cost our country more than we put back. How do you suggest the money be raised?

Also the ability to inherit wealth creates huge divisions in our society already. By taking a % off the top of the few who meet the threshold redresses this a little. Not much but a little.

@EnrichettaAgree.

This ‘I’ve been taxed twice’ is a flawed argument as there are many tax avoidance schemes. If you are PAYE, yes, perhaps you have a case, but the richest people I know have businesses / jobs whereby they know the tricks. Then they pass it on. Those kids haven’t done a thing (and have probably benefitted from their parents wealth in other ways).

This wealth inequality is what is dividing society.

Yes, I may inherit something, but there is a whole chunk of that tax free. I am happy to allow any inheritance over a threshold to pay through tax towards the greater good.

Inheritance tax is money which has already been taxed.
It is savings, and does not belong to the state.
The state has no right to anything we earn. However, they currently take money from us in the form of tax. Once we have paid tax, we can have what is left over.

Why should this be re taxed just because I die?

Whilst I understand your point £325000 for a 4 bedroom home in most parts of the country is not a great amount. We don’t live in a posh part of the country and a box standard new build type home with a small garden is at least £350k. Assets including jewellery, a car etc also forms part of the estate so it quickly adds up when playing strictly by the book.

Actually I feel there should be some safeguards for children who lose their parents, probably up to 24 like the SEND system. But I wanted to keep it focused on the much more likely scenarios of wealthy older people and middle aged estate beneficiaries.