To not see the problem with inheritance tax

[AgaPanthers]

"Millionaire lingerie boss Michelle Mone has called for inheritance tax to be axed to stop the government spending her money when she dies."

Surely it's better than the government spending her money while she's alive? I mean they have to get their hands on people's money one way or another, and if anyone doesn't need it, it's the dead.

"I work really hard every single day - like a lot of people - for my children and for my children’s future,’ she told BBC 2’s Newsnight.
‘I want them to have that little nest for their future and for their children, and I don't see why I, others should work extremely hard, pay your tax and then when you die it is like a double whammy."

I work hard for my children too, so that they have a good education and can make the most of their talents. But I don't really see why my grandchildren, for example, would need to receive my millions (if I had any!) untaxed.

Others seem to feel the same way, giving to charity www.news.com.au/finance/work/tycoons-who-wont-give-money-to-their-children/story-e6frfm9r-1226702468883, rather than enabling several generations of progeny to be idle wasters.

For the record, the IHT rate is 40% above £325k, but for a married/civil partnered couple, the allowance is transferrable, so a married couple can leave £650k (which is 32 years labour at the average wage.) entirely tax free to their children.

[Bearbehind]

I wonder if the argument would change if IHT was tapered from zero?

How many of those arguing that it is a good thing are doing so because it will never actually affect them?

[TheGirlFromIpanema]

Woowoo, so would you prefer a higher notional rate of income tax then?

It has to come from somewhere. IHT gets so much more press than other forms of tax because of the people it affects.

[WooWooOwl]

No, I would prefer there to be less spending on things like foreign aid and child tax credits so the tax isn't needed.

[OnIlkleyMoorBahTwat]

But woowoo, you friend must have inherited over Three Hundred Thousand pounds to be troubled by inheritance tax.

She could have sold the house and bought a smaller one, or got a mortgage on it, or any other solutions. Her parents could have taken out life insurance to cover the tax.

She sounds like a friend of mine who inherited over One Million Pounds worth of houses and complained about having to sell two of them to pay the tax.

People who pay the tax are still massively more well off than the majority. How many 21 year olds are GIVEN a house?

[CHJR]

No, Bear, I'm admitting to some inconsistency and the fact that there are all sorts of valid special cases out there. For eg, as others have said, if the children are still minors when their parents die. And if there are special needs, it does seem more efficient if we can find some tax-sheltered way to save money for DS2's future instead of leaving it all to the government -- but then again, is that fair to the SN children of people who can't afford to leave an inheritance to their SN kids?

So no, I don't prefer the tax man to my DC, and I admit to inconsistencies that favour my own family's needs. But objectively and thinking fairly, I do not think my children are more entitled to inherit money tax free than someone else's children are entitled to EARN money tax free.

Does that make sense?

[Bearbehind]

It doesn't make sense to me CHJR, it sounds like you are saying you think IHT should be imposed on most people at 100% but not to you as your circumstances are exceptional.

[traininthedistance]

FFS it isn't double taxation (though there are plenty of instances of double taxation, which isn't a problem anyway).

IHT is what's called a transfer tax - on unearned gains (like CGT which is also a transfer tax). It's a tax on the people receiving the money; ie. on the receipt of an inheritance (and was at one point actually called Capital Transfer Tax which makes the status of the tax a bit clearer). It isn't a tax on the dead person. It's only historically collected from the dead person's estate because that means it is harder to evade.

[WooWooOwl]

She did sell the house in the end, but have a heart FFS! This poor girl lost both her parents while she was still at university, do you honestly think it's right that she should lose her home as well?

Her parents weren't wealthy and the house wasn't big. It was just in an area that had seen house prices rise. But as all the other properties in the surrounding area had risen as well, it wasn't much good to her unless she wanted to lose her parents, her home, and the area she had lived in all her life as well.

Yes, her parents probably could have got life insurance, but they didn't. Presumably they didn't expect to both die on exactly the same day. They weren't particularly financially savvy type people from what I know, they were just simple people trying to make their way in life like everyone else.

It's true that not many 21 year olds are just given a house, but then most 21 year olds have at least one of their parents around. Plenty of parents help their children emotionally and financially well into adulthood. Should that be banned as well?

[WynkenBlynkenandNod]

Yes it is hard having to sell a house to pay inheritance tax but the implication is there will be something left. People have to sell houses to pay Care Home fees then the whole lot can go, so I'm not really feeling a lot of sympathy for those having to pay IHT.

[formerbabe]

I believe those who die leaving dependent children under the age of 18 should be exempt from inheritance tax.

[TheGirlFromIpanema]

I think you are deliberately misunderstanding what CHJR has said Bear.

WooWoo well luckily for the rest of us we don't live in a society that prioritises inherited wealth over children or even, heaven forbid, forriners

[WynkenBlynkenandNod]

I think though seeing as the Government want us to house our children till 25, then in the case of people like WooWoo's friend the payment of IHT should be deferred until at least then.

And my not feeling much sympathy was aimed more at Ms Millionaire rather than a yong adult. It must be very tough losing parents young.

[Bearbehind]

I genuinely not trying to thegirl that's just how it reads to me.

If I'm misreading it please explain?

[WooWooOwl]

It's not about people being entitled to a tax free inheritance, it's about people being entitled to do what they want with their own money, including giving it to their children.

If you don't think people have a right to give what they have to their own offspring, then presumably you also don't think they have a right to take them on holiday, or buy them shoes they don't need, or to help them with the cost of learning to drive, or give them money to help them though university, or buy them extra curricular lessons that others can't afford?

[formerbabe]

Try to imagine losing your last remaining parent (who you live with).

Then imagine, estate agents crawling round your house the next day because you need to sell it to pay inheritance tax.

We are not all rich bastards you know.

[CHJR]

It's ok, bear, what I'm trying to say is that I know that (like a lot of people) I have a tendency to think what works for me and mine is the best solution. But my brain admits that's not fair. I would like a world in which my second child was more protected, but I'm not yet so far gone that I think we are entitled to be more "special" than anyone else. At the least, there are a number of kinds of special cases out there. If we could all see the world without our own glasses on, we might come up with an answer we all saw was fair. But I know I wear these coloured spectacles... and anyone rich enough to leave an inheritance, or gain one, is also wearing special glasses that bias their view.

[Bearbehind]

Interesting that no one arguing in favour of IHT has said it would ever actually affect them.

I can't believe anyone who had the opportunity to leave what they have built up to their children would argue that taxing part of it at 40% was a great idea if it was actually going to happen to them.

[MidniteScribbler]

I think it would be fairer if a property is inherited and the beneficiary uses it as their residence that it should be exempt from tax. People should not have to sell their family home if they choose not to.

[formerbabe]

This whole thing makes me so upset. I lost my family home thanks to this tax. I still miss it.

[CogitoErgoSometimes]

YABU. Time was when inheritance tax was something only a few landed gentry had to worry about. Flogging a few Constables when Pater popped his clogs. Now it's affecting 42,000 families, a lot of them ordinary working-class people who have earned & paid tax already on most of what they're leaving behind to their nearest and dearest. It's immoral to be penalised for a) having been prudent and b) dying!

[CHJR]

Oh, it'll affect my DC not least because we own a house in London. (Which was recently bought not too much capital gain yet, but twill come, twill come, why do you think we bought it?)

I beg to remind you as I remind myself: just because eliminating inheritance tax would benefit my children is NO reason to assume that's fair.

(And, not to hijack the thread, as far as unfair profits go, if DC wish to live in London, they'd still be better off with a 100% IHT and with London property rising more sensibly in line with savings and salaries. As it is I suspect our DC are screwed. Which of course makes me want even more to save our pennies and help them out, however unfair that it to YOUR children.)

What I don't want is 100% inheritance tax and still no help for those people with SN, or no chance of buying a house.

[meditrina]

"But woowoo, you friend must have inherited over Three Hundred Thousand pounds to be troubled by inheritance tax."

That's a two bedroom flat in zone 3.

"Interesting that no one arguing in favour of IHT has said it would ever actually affect them."

I argue against it, but actually don't know if it would affect m family.

My DM has savings which, when combined with the value of her house might put us into IHT territory. The reason she hasn't spent it? So we can use her money to pay for nursing home fees if necessary, so she can choose where she lives not have just the council basic.

[TheGirlFromIpanema]

I agree that there should be a way to defer payment in cases where the recipient would lose their home.

Only if it is one property and actually is their home though.

Yes WooWoo, I believe people should choose to spend their money as they wish. That's not what IHT affects though and to suggest otherwise is disingenuous.