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!

Also why should class come in to paying tax? That is a baffling argument. should a plumber who earns more than £150k not be subject to a higher rate of tax because they are working class?

Sorry? This has nothing to do with inheritance rules. Same can be said for fathers can't it? A dad who brought up the children alone?

A child can claim a tax free allowance of £500k from each parent. If they are not together, the child should (if in the will) inherit from both parents anyway.

Sure, they may not be able to keep a house if it's over the £500k but they will still inherit a million pounds worth of assets with no tax upon the death of both parents.
Considering most children have made their own way in life, moved out of the family home by the time their parents have died, it's not really that much of an issue.

@Bjorkdidityes my mum didn’t really work much and has used the NHS a lot. My aunt never worked. Pretty much all my friends at school only had 1 parent working full time which statistically wasn’t unusual.

Yes, he was married.
No, my partner didn't have to pay IH as he was allowed both sets of his parents allowances.

I don't think working class or whatever has anything to do with anything to be honest.

Whether or not your house is worth a lot when you didn’t pay much for it depends entirely in which part of the country you live in - and often, a good proportion of a house’s increase in value is to do with what has been done to it by way of improvements. I think it is natural to hope to pass something on ti your DC. What infuriates many people is that those who have lived on benefits in subsidised housing all their lives then expect those who have paid for,them to pay again through inheritance tax. The really rich can find ways round it (see Tony Benn, and the Miliband brothers using a deed of variation to minimise tax on their father’s will) whereas those whose main asset is a house that they are living in, and who may well have been living in straitened circumstance es, end up being stung for tax.

A lot of places in London eg Tooting, Brixton, Hackney, there are many more) were not expensive in the 80s & 90s. Inner London wasn’t as desirable as it is today.

I think most objections to IHT are flawed thinking. You don't pay it, obviously, your beneficiaries do, so you're not being 'taxed twice' - you're dead. And as things stand, the vast majority of those beneficiaries trouser huge sums of money without paying a penny in tax. A flat 10% on all estates would be excellent.

So many men don't marry the person they have kids with, many women decide not to marry for reasons such as he may be an addict or have gambling issues or not have as many savings etc etc. People are increasingly being single mother's through choice. Men are killing their partners and women are being told to suck it up and pick one to marry just so our kid gets another £500k. Men don't end up with kids on their own a fraction of the amount women do. Men don't end up without maintenance in the majority of cases either. If all the mother has is her house and a low wage, maybe working for NHS serving the community, while the dad never paid maintenance, why is her kid the one who doesn't get to keep their home?

But that’s only if they’re an only child. The 500k is for the estate not per beneficiary. If you have 5 million in assets and 10 kids to who you leave everything, you still only get to pass down 500k tax free which is the 325k nil band plus 175 to direct beneficiaries assuming the family residence is included in that.

I am supportive of IHT in general but think there would be less push back if the rate was lower but the base was broader.

10 dc? That’s common

I agree. Someone up thread said that it was unfair that working class people were being targeted again and I was just saying I didn’t consider a couple with £1 million worth of assets working class anyway, and you gave an example of an apparently working class couple who weren’t affected by inheritance tax, thus adding weight to the argument that inheritance tax does not target the working class.

They don't take it on a whim! Taxation pays for public services that it would be impractical for virtually all of us to provide for ourselves. From each according to our means, to each according to their needs. Tax pays for all or most of:

Our diplomatic relations with other nations, including promoting the UK as a place to visit and do business with
Armed Forces
Emergency services - fire, ambulance, coastguard, police
Criminal justice system - police, courts, prisons, probation service
Health care
Pensions and other welfare benefits for those who can't work
Social care
Education
Social services - looking after the vulnerable
Environmental protection, trading standards and so on

If there isn't enough coming in, some of those are going to have to be scaled back.

Also, the gap between rich and poor in the UK is already far too big. I'd like to see some of those with very little money who are working very hard but still struggling get a bit more help and support.

We could go on all day with whataboutery.

This is society as it is today, which is one of the main issues with IHT, it isn't reflective of women earning more, choosing not to marry, having kids alone and having a better education than 40 years ago. We still penalise them if they manage to house their kids and work alone purely because they didn't marry. It is archaic.

do you even have children?
are you on talking terms with them?
do you have any savings at all? or do you work bare min?

It's a very strange mindset

Tax rules are tax rules. They have little to do with if a person is abused or anything. Sorry.

@houseonthehill Exactly. Although I had to swallow my reaction when a friend bitterly complained about the utter unfairness of 40% tax levied on a small portion of her husband's grandfathers estate that reduced the huge inheritance they got by a few thousand, as that very day I had paid a full 40% tax on a very modest work bonus (think a couple of thousand pounds) that I had slogged all year for.

gain in value minus expenses too (mortgage interest, refurb, maintenance, building extension).

The thread title is "what is wrong with IHT?" not "Please defend IHT when people point out what is wrong with it".

Um why should expenses incurred in maintaining your home be tax deducible - that is mad. You maintain your home because you live in it and want it to remain liveable.

I can't undertsnd your logic at all keeping your DD less well off because you work with vulnerable DC.
Why not just de parent your own DC and pop them into care ro make everything really equal or move to the most enourmous and deprived estate jn the UK and send them to the most deprived comp with terrible results to level things out ?
Your job surely as a parent is to 100 % have the backs of the DC YOU have soley chosen to bring into this world. You have no idea what their lives will be like / cancer /death /bad partners ,sick DC DC with Sen that ruins their marriages ,theft fraud who knows .
We don't know.

On the flip side then why should something you acquire to live in or, something you acquire to meet a basic need of survival, rather than an investment, be taxable

I bought a house 30odd years ago. It is now worth many times more than I paid. While I have worked hard in the intervening period my paper ‘wealth’ has nothing to do with my working or not. I am entirely the beneficiary of house prices going up - unearned income. Of course that should be taxed.

This is a different conversation, and one worth having. When we believe the government is mismanaging our money, we can vote. I would just point out that the dissatisfaction started to rise sharply during 14 years of Tory governance - HS2, billions misdirected during the pandemic, and I could go on and on - so it cannot be written off as simply a problem with Labour.

But we all use public services, rely on the national defence, etc. No one’s DC are exempt. Why shouldn’t everyone’s estate help to fund this? I am in favour of a generous exemption and then rising IHT rates according to the value of the estate, maintaining the top exemption and rate.

This means that the loopholes used by some of the wealthiest have got to close. A tall order.

If the funds could solve the social care crisis, everyone would win.

As for people threatening to leave because of taxation, talk is cheap. It is used by those with no sense of place or culture to try to influence political outcomes. It always seems really vulgar. The right wing press dutifully gin it up.

If you retain UK citizenship, your worldwide assets are subject to UK IHT for 10 years, and your British assets will always be subject to UK IHT.

Add to that list the hundreds of millions going to forgein aid like the 153 million being sent to the powerfully nuclear armed country of Pakistan