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!

You didn't ask me but I think the current arrangement is ok - your main house attracting less tax if left to your direct descendants.

I don't want £150k or more of my money to go to government. Even worse if it's a labour government. That's why I give my 3 DC an allowance each month and do the annual gifting. I'll be passing on as much as I can before I die but still hate the thought of government wasting my money.

Your estate must be fairly hefty (£1.4m?) if your IHT bill is likely to be in the region of £150k and your recipients would still be receiving a big chunk (£1.25m?). I can't see a big issue myself.

I seem to remember you are the poster whose DH is a Reform candidate. Presumably you are OK with the government spending on health? Elderly care since you are a caring carer? Or foster care if that's who you care for? Defence? The royal family?
We can't have any of these things without taxes.

Most people wouldn’t. It would be absurd for anyone to complain about getting a windfall of a share of £1.2 million. No government will “waste” your money @caringcarer. It’s not yours when you’re dead.

The government wastes money - I want my estate - given that there is anything else - to benefit my kith and kin, not some randoms who are having children they cant afford.

anything left when I depart this mortal coil

I don’t care because I’ll be dead with no further use for my money. I’m pretty sure at least one of our kids will “waste” it more than the government would.

Assuming, I snuff it first, my sister would never allow any member of our family to waste an inheritance.

How would she stop them? You can’t control what people do with money once it’s theirs.

Yes
based on @echt s principle that beneficiaries haven't paid any tax
of course, it makes perfect sence.
All assets should be taxed

Agree. IHT should be paid on all estates whatever the size or value.

It should be reduced to 10% to reduce the burden on smaller estates and to reduce the incentive for larger estates to avoid it. I believe this will increase the overall IHT tax take and make it simpler to administer.

Agree

Agree

So your aunt left around £1.7m?

For an estate valued at £1,700,000, the inheritance tax (IHT) liability is as follows:

• Without the Residence Nil Rate Band (RNRB): £550,000 for a single person.

Well of course you don't see the big issue. It's not your money. I don't see any issues with you being taxed 90% on everything you own but I imagine you do.

The big issues with IHT as I see it are:

1. 40% is too high a rate of tax to pay. It encourages people to estate plan to avoid it or to fritter the money away rather than pay the tax.
2. The frittering away is an issue when this leaves people in more financially precarious situations when they're old and more likely to be dependent on the state. I know many seem to enjoy the idea of us all being equally dependent on the state but the reality is that financially we need people to be as independent as possible, especially when they get old and the big bills are likely to amass. People save and preserve assets for their kids that are a source of wealth for them to pay for expensive care or to ensure they have their own home rather than relying on the Council.
3. It isn't even about dead people not needing the money. We are all in the position where we can't even gift our money in life to our loved ones without them risking a huge IHT bill if we happen to die within 7 years. It's crazy! You can be a middle aged parent gifting your children deposits for houses and be unlucky enough to die within thay period and the children have to somehow find an enormous amount of money to fund a tax bill.

I think the biggest issue with IHT though is it strikes at the heart of family values and those who are motivated to work hard and succeed to improve the lot of their children. It's a natural human instinct to want to do this and yet to know 40% of everything will be taken away when you die is hugely demotivating. Before people mention how this entrenched inequality and unfairness, 90% of wealth is lost by the third generation anyway. There really aren't many wealthy families that will retain this advantage for long anyway unless they can find an effective way to sustain it.

It’s not 40% of everything. It’s 40% of an estate over £325k for a single childless person, over £500k for an individual with children and £1 million for a couple with children. Quite honestly if our kids complained about an unearned windfall of a tax free share of £1 million and 60% of the rest I’d be ashamed of them.

This💯

I think the biggest issue with IHT though is it strikes at the heart of family values and those who are motivated to work hard and succeed to improve the lot of their children.

I have always said IHT is personal. I work hard to benefit my dcs, not to pay extortionate taxes to a useless government when I am dead. As it is, my dcs will be the biggest beneficiary of my wealth, when I am alive.

If Labour has its way, there will be far more people reliant on state to provide in their old age, aka voters for them. Disastrous for the UK but hey, did I say the government is useless.

so you resent your kids and happier to give it to taxman? this explains your consistent position on IHT.

I'd be much happier for my DC to "waste" it and enjoy some happy times, even if I don't approve their life choices, than for my money to be taxed twice

Exactly. People assume that everyone's married and it's 1m. It's not, it's 500k max per person. Which isn't much in SE given property prices.

and that's why if would be much better to apply inflation indexed CGT on all inherited assets but abolish IHT altogether. So no triple taxation of earned income

Far More expensive for Hmrc to run unless that’s just on property

Some people want their life's work and assets to go to their kids. I don't want it to going to the state, I definitely don't it going to fund benefits.

There's a reason DH and I are looking to leave for tax planning purposes.

My money won’t be “taxed twice”. The vast majority of my estate, like most others my age, will be due to house price inflation. That money has never been taxed.

Yes and £325k if you don’t have direct descendants.