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 don’t object to it in principle although I understand people disliking the double taxation point, but I object to the fact the threshold was increased almost every year between 1986 and 2009 and then it suddenly stopped, inflation and property prices haven’t stopped going up.

Additionally, I object to the fact that you can only pass on your inheritance tax free to a husband/ wife, meaning couples who might not otherwise want to marry are forced to marry, and elderly siblings who live together (and I know a couple of such situations) risk losing their home when one passes.

If you’re wealthy enough, it’s also easy to get around, which isn’t at all fair.

Trust funds do not get you out of tax
Its Just a different tax and need regular payment

Although I think they should not be allowed as they are expensive for Hmrc to monitor and abused to avoid a potential higher IHT sum

why hasn't the signing over property/assets been better managed that enables people to swerve paying large sums of tax

every I know who has money has done this then much less tax is paid, i rather changes were made around this and keep an inheritance tax at a lower rate

If you sign over your property and they don’t live in it
they will be liable for cgtax

If IHT is reduced to 10% for everyone it will make it more expensive to sign over property ( as cgtax is a higher % )
So people will stop doing it

This wealth inequality is what is dividing society.

But what do you actually mean by that/see as a practical solution? Communism?

How can it be unaffordable if you're only paying CGT on the gain and it's paid at the point of sale? If there's no gain, there's no tax to be paid.

It is a matter of perspective. As I said in my earlier post:

This is a fundamental left-right split in the way people see society: the right tends to think of the basic unit or building block of society as being the family, so money is owned 'by the family' and should be passed down and retained in the family. The left tends to think of the basic unit of society as the individual, so each individual pays tax on what they receive, whether it came from their family or otherwise.

@user593 but why should people expect to opt out of marriage but also enjoy the benefits of it - and i am saying that from the POV of someone who owns a property with my partner and chooses to remain unmarried. Marriage is there for everyone that wants it, but you can't opt out and expect to get the same benefits.

To illustrate how little this would affect most people - we own a flat in London and have wills to inherit each others half and we still get no where near the income tax threshold as it currently stands.

My comment here wasn’t about cgtax
see the running thread

No need to go quite as far as Communism. Hefty wealth taxes of various sorts should do the trick.

If you are asset rich but cash poor, so can't afford the land tax on your property, the solution is to sell up and downsize. Or re-mortgage.

Edited to add, if current owners who have paid stamp duty were exempt from land value tax in their current home, they would never move house again. Yes it does unfair, so perhaps something like a LVT holiday of 5 or 8 years would be a solution

Yes they will in the short term
but result in even more net contributors leaving
We can’t afford that

heres a Google on recent numbers

HMRC Data: Figures covering the financial year ending April 2025 show that 9,000 non-dom taxpayers left the UK or changed their tax status, alongside an additional 800 deemed-domicile taxpayers, leading to a net reduction of 1,200 active high-wealth non-doms. 1]
Millionaire Outflows: Private wealth reports and groups like the Adam Smith Institute estimated net outflows running into thousands of high-net-worth individuals (with estimates pointing to over 10,800 to 16,500millionaires migrating away during peak reform periods), reducing the overall base of resident millionaires

What do you mean IHT is about what you didn’t choose to leave them? It’s a tax on your estate, so who you’ve decided to leave it to is irrelevant.
And for all those who say super wealthy don’t pay it, where do you think the National Trust and English Heritage got most of their properties from?? It’s because the inheritors can’t pay the tax on them so donate them.
I think the issue is as mentioned PPs it forces people to sell their family home; it feels like a double tax; and penalises people who live in more expensive areas (like London your average three bed terrace is going to be much more valuable than elsewhere). Plus the government requires you to pay it six months from death, which is not feasible unless in liquid assets.
Handing over part of your estate only works if you don’t benefit. So say you have a second home in Cornwall and you sign it over to your kids. Well if you go stay there yourself you are getting benefit from it so it’s still considered part of your estate.

I’m with you, OP. If I inherit a house, I didn’t work hard to earn it, I didn’t do anything, so why should I get it for free? The country needs taxation, and this is a way of doing that via the higher value estates. I have no problem paying my dues on assets that I did nothing to earn. If it wasn’t this it would need to be recouped in a different way.

I absolutely can imagine how much a house is a reasonably good part of London can cost.

Capital gain should be inflation indexed and then taxed. Incl on prime residence.
So you don't pay CGT on 2m-£150 gain, but you pay CGT on this difference minus inflation rate applied over 70 years.

But then no IHT.

I believe IHT at 40% on such house would be still much higher than CGT.

This would be way much fairer than current situation - very rich can transfer assets whilst still alive or use trusts, poorer ones are under IHT thresholds, and the same suckers who paid enormous taxes to accumulate some assets are hit when time comes to give it their kids.

Inheritance tax used to be aimed at the very wealthy, now it hits people who have much more modest amounts. It's going to hit those in the SE disproportionately because of property values. I don't object altogether to some IHT.

I'm 68. My parents and DHs parents were not well off and we didn't inherit anything.
We have savings which we built up out of taxed income. We pay tax every year on our savings so have already paid twice.
We have DC in their 20s who we help financially now. They know full details of our finances but they also know that our savings may go on care.
Our house isn't valuable in comparison with property in London.

I'm all for people like me paying more, just not this way. For starters I would scrap NI and merge with income tax. Then I would scrap the triple lock and replace it with one measure.
I would introduce a paid insurance for care.
In other words tax me now, but don't tax my kids who this money is for.

level the playing field with people who do not get an inheritance

Of all the good reasons to tax the dead this is the worst, based on envy

That’s a classic answer
but we will be left with properties that are unsellable and
massive negative equity ( if sold for less which in turn makes a mockery of the very policy as the tax in turn would have to reduce, so ultimately bringing in less….)

For those who’ve been through this before they will remember a massive property crash, repossessions, a financial crash leading to mass unemployment
We can’t play about with the housing market without it affecting the whole country

This isn’t a policy that is just about hitting those rich in assetts ( which people seem to glorify when they aren’t in that demographic) .

This ‘ idea’ would hit all of us

If a few tens of thousands of rich people leave, the net effect on society will be positive.
Because it is not just about the tax-take, it is about the corrosive and toxic effects on society of extreme disparity in wealth.
Read the book "The Spirit Level".

Envy doesn’t pay the bills I’m afraid

We need net contributors.
Its a simple financial fact

I'm old enough to have witnessed several rounds of property crashes. There are winners and losers.
When asset prices (property) inflate, there is always an eventual correction to the bubble. If a land value tax puts the breaks on bubbles in the first place, it will be a long-term win for a more stable society.

This.

X

I agree with the idea of allowing purchasers to spread the cost of stamp at an affordable annual rate
( if they chose to do so )

I do not agree that those who have already paid stamp are billed again

It is immoral to bill someone twice

I also think both avenues should be available to a purchaser. Giving choice

I'm not envious - that is a lazy cheap shot on your part.
I just have a social conscience.
(and I am very happy with my personal level of wealth)

( I didn’t say you were )

The idea however is based on envy of what others have
It’s shooting ourselves in the foot to think we can survive without net contributors
Its fiscally unworkable to pay the bills

I didn't benefits bill?