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!

This is so true - all this “hard work” is actually a lot of luck. We’re in our 50s and a huge amount of our assets are down to the property market not our hard work 🙄

My house has only increased in value by the amount I have spent on it. House inflation is very low currently. Why do you assume that most people bought in 1985! Very flawed logic there as houses are changing hands every day!

Our daughter unfortunately has disabilities / illnesses and we want to provide for her past our death. I am vaguely aware that there are likely loop holes for this which avoid or reduce inheritance tax ... but as a member of the general public I now have to go pay money to work out what these are and how to access them.

Unfortunately no one is going to give you it. You have to pay for the advice just like others do. HMRC have no interest in you keeping your money. You might need to spend 1k to save 100k

Not necessarily. It doesn't apply if DC also live in the property and everyone contributes to the running costs, etc.

I don't see why people with not that much should be taxed on what they've already paid tax on. The threshold should be a lot higher.

The threshold is so high at the moment that at least 95% of estates are not liable for inheritance tax and a married couple can leave up to £1m to their direct descendants if it includes the marital home without a single penny being charged in inheritance tax. If it went any higher there would be little point in having the tax at all.

We're talking about inheritance tax, which may apply to the value of houses that were the property of someone who has now died. Statistically those people are likely to be very elderly and to have bought their property a long time ago. The huge increase in property values in recent decades means the people inheriting are getting substantial amounts of money.

How does inheritance tax impact those with not much? £500,000 + strikes me as much. A big
pile of much.

It’s not necessarily £500k per estate. If you have a property but no direct descendants it’s £325k .

£325k well that’s hardly anything is it?

It’s £325k if you have no direct descendants to leave your property to, so sone of the 5% where tax us paid are not that large (relatively speaking)

I think the issue is that it’s been frozen since 2009 whereas other estates have the advantage of the nil rate residence banding of £175k. IMO it’s not fair: either give all estates the same banding or none.

Ok you can change the details of IT - it’s not and is never going to be my problem. My issue is the HORROR when posters claim they are being hard done by when they don’t get the large lump of cash they have in no way worked for.

@KarcherK5
you said
’and now they want to take a third bite’ ???
not now….they already do

Because we are talking about Burnhams IHT on all estates

an idea he has supported for more than 10 years

And? If I inherit money, it’s not money I’ve earned, it’s being given to me. That’s the definition of unearned income, why shouldn’t I pay tax on it?

I posted because you commented

‘How does inheritance tax impact those with not much? £500,000 + strikes me as much. A big
pile of much.’

Burnhams IHT changes would affect all estates. ie no ‘free’ £500,000

As I’m sure you know it’s the estate that pays the tax. Not the beneficiaries

Of note I don’t have a problem with IHT
if every estate is taxed at the same level with no lower threshold

The country needs the money

Re: 500k
In the North East, it is above the threshold to enter the top 1% of properties. Average three bed is £170k. With top 1% stripped out, average property price of other 99% is £155k.

In London and South East:
Average property price is £463k. Average three bed is £494k.
Average property price for top 1% of properties is £3.93m, entry point is £2.2m. Average property price with top 1% stripped out is
£428k. Average property price in top 50% with top 1% stripped out is £586k.

• from googling, unchecked.

In practice, more are liable, the tax is just deferred until the second spouse dies.

Agree with most of that but I would put a lower limit like the tax threshold. Under £20k tax free but after that a graduated tax. This is in no way a detail proposal just musings.

Agree
re small lower amount akin to the amount an elderly person is allowed to keep when in a care hime
It pays for a funeral, headstone, costs etc
That’s fair and without it Hmrc might end up paying

I don’t agree it should be graduated
though

The clever thing would be to apply CGT on assets at the time of transfer, inflation indexed, and then, if really needed, some smallish percentage, e.g. 5-10% on the entire estate, but abolish this idiotic 40%.

So this would control house prices to some extend, this would make IHT base way much wider, so small % on wider base would generate more, and those for estates that are currently subject to 40% IHT wouldn't be going through all loops to avoid it.

You're making even more assumptions! I am retired and have had health issues that mean I am unlikely to live another 10 years. I have friends that have cancer and some that have already died.

IHT hits those that die younger and unprepared the worst. Why are you assuming that everyone that dies is "very elderly"?

Agree
and to add many may not have owned their home for a long time
Many downsize or move near family