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!

From my point of view inflation indexed CGT on inherited assets would be a much better way than IHT. Assuming IHT abolished. It would be fair as no double tax, no spouse allowance and unearned wealth taxed once, but earned not double taxed.

Untrue..I live in the house I have chosen to give to my children when I die as per my Will. I have worked..still work and paid tax for years to pay the mortgage I still have. Why should they pay IHT on the house I am leaving to them when I die. It is the meanest tax ever

It came in at a time when wealth was super concentrated among a few families. But many more people are now pulled into the category (although I think it’s still a low %) and as it’s often the’family’ home that takes people over the threshold, I suppose it feels different, more personal.

I’m of the generation that benefited from 90’s London property prices, and could afford to buy and build wealth on relatively low, mostly public sector wages. That option isn’t available to my spawn, so I would like to be able to pass on to them the advantages that the market gifted me thirty years ago. However, I want decent public services and a strong safety net. So I’ve made provision for a life insurance policy to cover the IHT.

This seems fair to me: I am making provision for the tax dues throughout my earning lifetime, at a predictable and affordable cost. The government gets its money, my family get their inheritance and aren’t faced with a big bill at a potentially vulnerable point in their lives. You don’t need fancy accountants, you just need to buy some life insurance and write the policy into trust. Consume your own smoke and protect the assets for your family without dodging tax.

It also encourages people to gift or spend money while alive, rather than sitting sluggishly in a pension pot!

What about all the buying and selling during your life if you move home?
You could start with a 200k purchase as a young adult, then trade up 3 or 4 or more times, buy a 800k home in your 80s, then sell it for 810k home a year later, so the only capital gain counted is that last 10k on the last home, not the 610k gained over your lifetime? (simplified example)
So you pay tax only on the 10k, not on the 610k? (ignoring the 500k threshold for simplicity)

I think it’s mainly because that money has already had tax paid on it. Tax was paid when it was earned, when it was saved, when it was used to buy a house… tax on tax on tax.

You going to start pension bashing now too?

So if they spend all their money, then say, get dementia for the last 10 years of their life and need to be in a specialised care home. The government pays yes? Because they have no money left?

It seems that it's really fashionable now to bash and blame our elderly for everything.

What percentage?
My late FIL was in the same house all his life, 96 years. That house was owned by his dad and when FIL inherited as a young man, there was £150 left of the £450 it cost to buy which FIL paid for over a few years.

House in a reasonably good part of London. So, when my partner inherited upon his dad's passing, it was worth a lot lot more as you can imagine. Was my partner expected to pay for approx 70 years of capital gains as it had not changed owner all those years?

That's a detail that Parliament can sort out. The principle remains the same. Sometimes we need the government or other elected body to do something that will benefit us collectively, if not individually, and that has to be funded by taxation.

It’s not pension bashing, it’s a fact.

It’s all unfair
It should be the same for everyone with no lower limit at all

If the premise is that you are dead you don’t need the money then
what difference does it make

Tax every estate
or
none

Introduce a CGT tax on every house sale as well - simple and a good cash generator.

Seriously? You were the one talking about the benefits bill!

Did you just want to benefits bash in general?

Not everything has has been taxed though, has it? For many people it's the increase in value of the home has fronts the most valuable asset within the estate. That increase hasn't been taxed before.

Simple but would crash the market
People wouldn’t move
The Govn relies on a steady cash injection through sales and with a huge downturn this would collapse
People couldn’t afford to move for work and
It would prevent social mobility
etc

Nevertheless cgtax on extensions
would be a good way to move forward on this
Too many smaller properties are being extended leaving the availability of smaller properties in marked decline

You invest in property by extending you pay the tax. Just as developers have to

Stamp duty also freezes up the market and puts a break on people moving.
A better option might be an annual land value tax, to replace stamp duty (and council tax?). So you pay a bit each year, not a big lump sum when you buy.

As I see the fundamental building block of society as being the individual, not the family, I believe each individual should be taxed on whatever they receive, be it inheritance, pay, dividends, trust-fund handouts, or capital gains.

Oh god, if there are two cherished beliefs of the GBP guaranteed to drive me mad oitis "I've paid for my state pension" and "IHT is double taxation", neither are remotely true.

This is a Burnham idea

Two problems
current home owners have already paid stamp and Burnhams think tanks answer to that is … tough, suck it up !

The figures being touted make it unaffordable for many current homeowners

People need their money when they are alive
Taxing when they aren’t, if everyone is taxed with no lower limit, is fair

The individual is the building block of society?
Since when?

There are always arguments against every suggested tax though and until it's tried, no one knows what will actually happen. Everyone of us needs to pay more tax one way or another, that's the uncomfortable truth.

Because ultimately its unfair, why should I a single parent have to pay IHT when I die, when the aristocracy, rich, landed gentry and royal get to keep all their through trust funds. Its a illusion of meritocracy. I'll pay my fair share when everyone else with more money and land than me pays theirs. It just lets the rich get richer and keep their assets, while the hard working plebes have to hand theirs over. One way of keeping you in your lane.

You could also argue that rather than grab dead people's money we need to look at growing the economy instead.

We could also look at rent capping and mass rebuilding of council houses that were sold under the right to buy scheme.

Apologies if I’m misunderstanding but the number of adults who live with their dc in a house owned entirely by their parents which is worth more than 500k but the parents have no other assets at all must be vanishingly small. Even then they only need to pay IHT on the bit above 500k so can just remortgage for that surely?

Agree
but this suggestion is unaffordable for many current homeowners and there’s no way out of it

If you’ve paid already in stamp you should not have to pay again

Burnhams 10% IHT on every estate ( another think tank idea) would pay for elderly social care and save councils vast sums of money
Its a tax that is not realised whilst alive
and wouldn’t affect peoples current cost of living

Trust funds aren’t tax free. If you have a trust, you pay 6% of the total in the trust every 10 years. Plus any income taken from the trust is paid at normal UK tax rates.

If trust funds were totally tax free, then everyone would just have one!