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 really understand why it’s a stealth tax in some people’s eyes. It’s not like it’s a new invention.

From my perspective it is the huge change in the impact of IHT in recent years. 30 years ago we were 30 years old and could afford to buy a 200k 4 bed house - the price of which was well under the IHT limit. Our situation 30 years later hasn't changed much - we are in the same jobs and earn roughly the same with inflation based pay rises, but our house value is now above the IHT band. Today, our kids cannot afford to buy a house like we did and we can no longer leave them ours as they'd have to sell it to pay IHT.
So IHT contributes massively to the overall decrease in the standard of living our kids face compared to their parents. By refusing to increase IHT limits in line with house prices, the next generation are being punished yet again.

If you are being given more than £1m by a parents you have been born into wealth.

I think my objection is just that it has loads of weird implications. If, in my twilight years, I spend my money lavishly on myself, thats fine, and there's no tax (well VAT and alcohol duty)

If instead I live more modestly and want to help my family - suddenly there is a very large tax.

Why is consumption not taxed but helping your kids is taxed? Seems odd, I think helping people is better than lavishly consumption.

Separately building inter generational wealth helps families free themselves from dependence on the state, and I'd rather a world with less dependence on the state.

I suppose I think we fund a lot of things that are not essential. I would also like to radically shrink government expenditure. Singapore's government spends ~16% of gdp, ours spends near 45%. I don't think all of that 45% is made of essentials.

That really depends on where in the country you live. It wouldn’t buy you much around here.

Edited as misread like an idiot 🫣

1m is still a huge amount to receive as an adult who already has their own home and job etc…it isn’t like it is being taxed after the first 10k

Not sure I agree with a blanket 10% for the whole estate as income Tax and VAT was contributed to the pot at the time but property is a bit different IMO.

E g if my parents bought their big posh house (Scotland) in 1960 for £20K and it is now worth £350K no one has paid tax on the real terms valuation increase, that is either going to fund a care home or end up in my bank account through inheritance. I would support some type of CGT on property valuation increases.

Agree.

And Singapore does not have any inheritance tax (called 'estate duty'). All wealth is handed down on death gloriously tax free.

I dislike inheritance tax because it is 40%. I can just about stomach 10%. But at 40% (even if it is the value of the estate over 1 million), I will do everything to ensure my children get it and not the UK government.

I obviously don't enjoy paying income tax but I grudgingly accept it as a cost of working. I deeply resent IHT because it is wealth built up over my lifetime that I intended for my children. To steal from my dcs makes IHT personal in a way that income tax or VAT is not.

Relative wealth that is.

Why are you punishing success to feed off leeches?

I work and pay taxes, but do not enjoy nhs as I pay privately abroad, do not receive free childcare hours, no child benefit, pay road tax and council tax to use the roads and use my pothole ridden road and street lit.

£1m assuming you have - and leave your estate to - one child. A lot of people have more than one child. It’s also getting harder and harder for young people to get on the property ladder so it’s a lot to assume they’d already have their own home.

My aunt was single, never married but hugely successful in business. She lived simply and invested her money well.
As her executor I have just had to pay £550,000 in inheritance tax. She paid so much tax over her life right up until her death. She came from.proverty a real working class family.
She probably could have dodged some of this tax but didn't.

Inheritance taxis an abomination that the super rich don't pay.

Because the threshold hasn’t been increased since 2009.

Agree with this.

The state needs money to pay for all the services we use and need. Schools, roads, NHS, welfare etc. that money has to
come from somewhere . I’d prefer my estate to be taxed when I’m gone than to pay more in tax when I’m alive .
though the idea of a lower rate but applied to
more estates is interesting ,

If you paid £550K in IHT, then that still leaves a huge amount for the beneficiaries . How much do you think they need??

I’m not against IHT.

But you can’t keep it just to the scenario of wealthy middle aged people getting a windfall because it doesn’t just affect those people.

My parents are against IHT. Their basic argument is that you should re-tax income that’s already been taxed once. I’ve suggested that it would be us being taxed, not them - but they don’t see it that way. My parents started from a working class background and worked very hard - but the majority of their estate is due to the property boom.

in this scenario the aunt is presumably childless so the nil rate residence banding of £175K is not available to the estate: it’s only applicable if the property is left to direct descendants. Therefore tax is payable at 40% on the amount about £325k and this threshold has been frozen since 2009. This is clearly not fair as if she had had children the nil rate banding would have been £500k.
imo the nil rate residence banding should be applicable to all estates not just those where the deceased had direct descendants.

the nil rate band for direct descendants is presumably there to protect any children who may need to live there in the event of parents death. I would think that’s a good thing.

I still maintain that on an estate of presumably around £1.7m before IHT, it’s reasonable that a reasonable proportion goes in tax to support the wider society. The beneficiaries will still be receiving a huge amount

That’s a fair point, I asked Gemini AI where the money goes .
some of these may be questionable - eg HS2, but most seem pretty essential to me

Where the Money Goes (Spending Breakdown)
Public spending is divided by functional areas. The vast majority of the budget goes to social security, health, and debt service.
🟢 Social Protection (28–30%) — £384 Billion**
The single largest expenditure area. Includes:
State Pension (~£130+ billion)
Universal Credit, Personal Independence Payment (PIP), and disability allowances
Housing benefits and child benefit
🔴 Health (18–19%) — £242 Billion**
NHS services across England, Scotland, Wales, and Northern Ireland
Hospital care, GP practices, emergency services, and public health initiatives
🔵 Education (9%) — £119 Billion**
Primary, secondary, and special needs schools
Further education, apprenticeships, and higher education funding
📈 Debt Interest (8%) — £114 Billion**
Interest payments on cumulative government debt (gilt yields and inflation-linked debt).
🛡️ Defence (4–5%) — £50–£64 Billion**
Armed forces, equipment procurement, maintenance, and intelligence services.
⚖️ Public Order & Safety (3–4%) — £46–£52 Billion**
Police services, HM Courts & Tribunals, prisons, and probation services.
🚂 Transport & Economic Affairs (6–7%) — £88–£90 Billion**
Roads, railways (e.g., HS2, Network Rail subsidies), bus subsidies, local transport, and local economic development.
🏛️ Other Spending (20–25%) — £300–£350 Billion**
Devolved administration block grants (Scotland, Wales, NI)
Environment, agriculture, and flood defences
Housing, local council services, and community amenities
Foreign aid and diplomatic relations

I don’t disagree that an unearned windfall is a fabulous regardless of tax paid. I do think, however, that the rules should be the same: nil rate residence band applicable to all estates or none.

It was introduced, I believe, to address the huge increase in the value of property.
But if your property has increased in value and you don’t have children that’s tough your estate is taxed at the 2009 level which hasn’t been increased in line with inflation,

Protecting children living in the property following the death of a parent is a much more complex issue requiring trusts to be set up.

But consumption IS taxed, you even name the taxes in your post 😂

Unless you’re buying nothing but excessive amounts of bread and milk and children’s clothes, most things you buy have VAT so it is taxed.

So it's people having more money than you think they need that you object to?

I am in almost exactly the same position down to house value and agree with every word.

My mum is spending what she can on new windows for their big old Victorian house, house insulation and things now that turn their locked away money into value, not just for them but for the people who live in their house after they are gone. Why should that spending be taxed but the money if they didn't have such a sense of stewardship not?

I think increasing the number of people who pay inheritance tax is better than adding another tax on young working people to pay for social care. The older generations need to contribute more