To disagree with inheritance as a concept

[HeadsDownThumbsUp]

Just that. I think it's odd that the concept of inheritance is barely questioned in our society.

I don't think that anyone can really talk about social mobility in a meaningful way, or interrogate the class system, while wealth is still inherited.

Inheritance IS the class system.

In my opinion, inherited wealth is incompatible with a meritocratic society. It is also add odds with entrepreneurialism, and more generally the notion that wealth is earned through hard work, and thus deserved.

Thoughts?

"Claig - please explain how allowing taxing the top 3% of estates at a rate lower than the top rate of income tax benefits the "little people".

Now you have changed your argument. You were against inheritance as a "concept". I am arguing against that and any attempt to prevent inheritance as a "concept" so that the "little people" cannot choose to leave money to their children.

Talk, you say that "many, many baby boomers" own property worth more than £700,000 - and while more people own property of that value due to house price inflation, it's still not "many, many" people, nationally speaking. The average house price in the UK is £161,458. A tiny, tiny number of people own property worth anything even approaching £700,000.

Talkinpeace knows what she is talking about where finance is concerned.

Talk - you objected to inheritance being regarded as 'income' and stipulated that it was, rather, a 'gift' and gifts are not taxed. If inheritance is a 'gift' then why is it taxed above a certain threshold?

Clouds - I think that what people "owe to the system" is always up for debate.

Clouds and Claig - much earlier in the thread I did say that I was not opposed to a 'modest' inheritance. The vast majority of people only receive a modest inheritance. I would say, on balance, that I am against, as one poster put it 'significant' inheritance, which means that power and privilege are passed down from generation to generation of one family or class.

Claig, I'd still like you to answer my question - do you think that taxing the top 3% of estates at a rate lower than the top rate of income tax benefits the "little people".

do you think that taxing the top 3% of estates at a rate lower than the top rate of income tax benefits the "little people".

No, I don't. But I think that preventing poor people from passing on what they can in inheritance will hurt poor people more.

Average London Greater London House price
news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/regions/html/region10.stm
Even an average detached is over the marital IHT limit

Over 260,000 estates a year have to pay IHT
www.hmrc.gov.uk/statistics/inheritance/table12-4.pdf

not tiny numbers

Talkinpeace:
Try "selling or giving property to family".

HeadsDownThumbsUp
If inheritance is a 'gift' then why is it taxed above a certain threshold?
Because Governments are greedy and dead people cannot vote.

redbindy
Are you meaning to do with social services or taxation?

The seven year rules for taxation are absolutely clear : until the donor dies, the gift is definitely tax free. Even then it largely is.

Social Services/ Nursing care rules are an English anomaly, unrelated to inheritance.

Talkinpeace:
Also look at gifts.
Dead people may not be able vote but they also don't eat or spend money in other ways. They don't actually need the cash. Greedy relatives take an interest though.

TalkinPeace
You need to read more tax law

Discussing inheritance and whether it should exist as a concept, implies that it is OK for an outside authority to dictate what happens to any individual's property after death. I know that inheritance tax exists, but it is my understanding that the tax on an inheritance will not amount to the majority of the money/property, and I can accept that.

However, abolishing the concept of inheritance altogether implies the government (or some other authority which would have to be set up by Act of Parliament and would therefore be very vulnerable to being a tool of Government even if this was not the original intention) taking all of an individual's money, goods and chattels at their death - and to be perfectly honest, I find that a disturbing prospect.

..can't be bothered with all this inheritance stuff anymore...

My family have worked hard all their lives - my Mother's parents (& their parents before them - ditto back one generation) and my Father's parents (& their parents before them - ditto back one generation....) - all condensed down to one Family home and some savings.... all gone - nearly £390,000+ in Care Home fees - as my Mother has the misfortune to become ill after her husband had died.. doubly incontinent, semi-comatosed, immobile, unable to talk, hear, see etc etc etc etc

Luckily (sic ??) another member of the family - who had originally decided to leave his estate to my Mother changed his will - otherwise this amount would have also been considered "fair game" for her care...

I intend to leave my Estate to my children - not that they have yet "earned it" - but it is MINE - I EARNT it - and I will damn well ensure that they benefit from it...

Talk - I don't think you're reading that HMRC document correctly.
264,750 is the number of estates the document details, 250,048 of those paid 0 tax.

14,702 estates paid tax that year.

Tiny numbers.

Talkinpeace
"largely is" is not the same as totally is.

Headsdown
Sorry yes, could not find my normal link on the matter.

264,750 estates
14,702 paid IHT

but as the number of deaths in the UK is around 484,000
www.ons.gov.uk/ons/rel/vsob1/mortality-statistics--deaths-registered-in-england-and-wales--series-dr-/2011/stb-deaths-registered-in-england-and-wales-in-2011-by-cause.html
And there will be no IHT due when the first partner in a couple dies
the fact that 3% of all dead people : including children and the destitute : are paying IHT implies that its a lot more than 3% of people who could have descendants are getting hit by IHT

Redbindy
You obviously have a particular page of the tax manual open.
For the enjoyment of everybody on the thread, please name a category of gift that becomes taxable upon donation.
(as against if the donor dies within 7 years of making the gift)

But 3% of estates isn't 3% of all dead people.

The HMRC figures there won't include transfer of assets to a spouse or partner anyway, since they're not eligible for taxation, which is why the total number of estates listed is so low, compared to the annual death rate. The vast, vast majority of children do not have estates either, and so are not processed in this way. Nothing like 3% of all dead people are paying IHT - around 3% of estates eligible for taxation are taxed. The vast majority don't come close to the inheritance tax threshold.

YABU. I think social mobility has a lot to do with other factors rather than just money. I thoroughly dislike the notion that my life, or somebody else's, would be richer and more fulfilling if only others with more resources had less of them.

YABU.

If I had early money, and not spent it all, I would WANT to pass it on to my DC's.

OK, I am neither in line for an inheritance, nor will I have anything (other than about £3) to my DC's, so maybe what do I know...

Yes, it DOES keep wealth to those families that already have it, to a certain degree, but surely if you had a million in the bank, and you died tomorrow, you would want that money to go to your DC's?

It's just human nature, innit...

HeadsDown - where would you draw the line? Is it financial inheritances only that you would abolish, or money and valuable property, or all property? We are going to need a huge administration if all property is to revert to the state upon the death of the owner. Can we really afford all the civil servants we will need, to decide what is to be done with everyone's dodgy 80's music cd collections and holiday souvenirs from Majorca?

I wonder what the effect of banning gifts and inheritance would do. Would people who are successful become much more hedonistic, or would they simply not work very hard because there's not much point in gaining wealth if you have no influence in how it's spent?

I would add to your thoughts about the IT threashold some more thought about 'assets' such as homes, land and businesses.

It's possible to 'value' these things over the threshold when actually they only potentially have that value if sold. You cannot actually hand over 20% or 40% of a house. So the whole thing is essentially removed from the recipient if they cannot raise a loan against it or have the money to start with.
The same applies to farms and businesses because although in theory you can sell a % it may make the farming impossible/uneconomic or change the entire structure of the business (it's no longer a family business if 40% is sold to outsiders at market value and this changes the laws the business is subject to - duty to shareholders comes in).

Any protection for homes and farms is going to stray into ending up protecting the landed gentry... Many large estates are asset rich and very very cash poor. I do understand that... but I think that is a price to pay for the guarantee that generations of small holders or small business people are not thrown out of their own family business/home. Also, I am not sure that forcing the sale of a stately home or castle is always the best for anybody as they end up bought by rich outsiders or foreigners who pay their tax oversees rather than maintained by the landowner with generations of ties to the place (good or bad).