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.

[TheGirlFromIpanema]

I will most definitely be hit with an IHT bill when my parents leave their mortal coil. They are separated too so it will be two lots. DM is also an accountant and could probably set them up in a scheme to avoid it.

We won't though for a number of reasons (care home fee's primarily).

It will personally affect me and I still don't see any fair alternative.

[Bearbehind]

I truly don't understand your argument CHJR how could your children possibly be better of with 100% IHT- that would mean they inherited absolutely nothing upon your demise and then had to find a way to buy a property (if they hadn't already done so)

[Piscivorous]

Matthew Wright suggested this week that the South East should have a higher allowance as the property prices are higher. I think this is a dreadful idea as, while I understand it is harsh having to sell a home to pay IHT, a large amount of that capital is "unearned", acquired solely through a rising market. Meanwhile those in other parts of the country don't benefit from huge property gains and have to pay IHT at a lower point.

We will probably get hit with IHT on the ILs side (although they are very fit and healthy so may live longer than us!) but I still think it is reasonable.

[brettgirl2]

yanbu and potentially I will be liable for it one day. wtf should I be allowed to inherit money tax free when someone on 20k and struggling has to pay income tax? Just don't get it, pure and simple.

Selling family home - at least you have enough money to buy another!

[Bearbehind]

Now interesting that the only 2 responses where it will affect them are from the beneficiaries and not the donors......60% of something you don't currently have is better than nothing and it clearly isn't going to affect your living arrangements ie you aren't going to have to sell up to pay the IHT.

[TheGirlFromIpanema]

Bear 100% inheritance tax is tax applied on 100% of the estate at current rates - not literally giving the whole amount to the treasury.

Did you not really know that? You do realise also that 40% income tax does not equate to 40% of your gross salary too? Serious question.

[CHJR]

Bear, I guess I was linking two only slightly related issues -- IHT and the way the property market is making some of us richer than work. My children would be better off if IHT were 100% and the property market worked logically, than they will be under the current system, where yes, they may inherit something, but property will STILL be way out of their reach. I think the current system will benefit only children in one-child families who can inherit the whole chunk. But don't worry about my DC. DS1 is due any day to reproach me for these superfluous siblings, but the fact is we're giving them everything we can in our lifetime, before IHT becomes relevant and they will still be unfairly lucky kids.

[brettgirl2]

and my parents and in laws haven't paid tax on it is from increases in property prices.

[TheGirlFromIpanema]

And Bear, if you read my post you will see that in my circs DM will not be availing herself to any avoidance schemes. She is old school and appreciates that more tax to pay means we are doing well

[formerbabe]

Brettgirl....what makes you think you would have enough money to buy another especially if the inheritance is divided up between several children?

[brettgirl2]

Erm you would have a better chance than others? ???

[Bearbehind]

thegirl I'm very much aware both facts- I'm an accountant.

I was referring to the fact that CHJR said Personally I think that inheritance should be taxed at 100% (everything goes to the tax man)

Note the bit in brackets.......hence the reason I don't understand her argument.

[TheGirlFromIpanema]

Aah ok Bear, I was genuinely asking.

Many people I have spoken with over the years just don't get tax. Including ExP. He thought he would be worse off once he started earning in the 40% band as opposed to just under it ....

[Bearbehind]

If he had a company car or other taxable benefits he probably would have been worse off if he only just earned above the threshold

[formerbabe]

Are your parents still alive Brettgirl?

Yes, you would have a better chance of buying a home but you have also lost your home, as I did!

[Eghamite]

I think inheritance tax is both good and bad.

It is good in order to avoid having generations of families, such as the Vanderbilts and Rockerfellers, where no one needs to work, and they get richer in each generation with minimal effort.

It is bad if it means modestly middle class families get caught out. As parents, we all want to pass as much as we can to our children.

The thresholds are pretty high. They don't concern lower earners, and perhaps encourage those with more ample wealth to enjoy themselves in old age rather than saving it for their undeserving children.

My FIL is very pragmatic and inheritance tax savvy. He has five children and gives out a couple of thousand pounds each every year. He would not want to miss a year, then gift a lot, only to die within seven years.

[brettgirl2]

I already have a home babe. That's my point really. dh and I can manage to earn our own money. Why should I not pay inheritance tax? .

I don't understand. And any proportion is a good deposit surely? Why should people inherit not work?

[WooWooOwl]

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.

It doesn't make much difference if they are spending the money or giving it to their children. People should be able to do what they want with their own money and their own property, and that is exactly what IHT affects.

Matthew Wright suggested this week that the South East should have a higher allowance as the property prices are higher. I think this is a dreadful idea as, while I understand it is harsh having to sell a home to pay IHT, a large amount of that capital is "unearned", acquired solely through a rising market.

But that unearned capital is meaningless unless it's going to someone in a much cheaper area. My property (tiny 3 bed semi) has increased in value by about £100,000 since we bought it, but properties the next size up in this area have increased by at least £150,000, and that's just to add a box room as a fourth bedroom. The increase is worth nothing in real terms when everything else has increased as well.

[formerbabe]

Brettgirl...I was young and still living in my family home when my last remaining parent died. I was forced to leave my home.

[LongTailedTit]

YABU from my perspective, as the only people I've known to be adversely affected by inheritance tax were farmers and other land owning families where the family business passed on thru generations along with the family home.

I don't know of anyone who's complained about inheritance tax when they've just inherited a lump sum. It might be gutting to see 40% go to the taxman, but it didn't 'belong' to them as such so can't really be missed.

The farmers I knew lost their farm house (had to sell to meet the tax bill, small farmers being asset-rich and cash-poor), a chunk of their farmland, and whereas the family had managed to live with all three generations in the same house, they all had to move elsewhere, separately, which meant they were no longer 'on site' with their animals and farm buildings. It was a huge blow and a disaster for the farm.
Inheritance tax was directly responsible for breaking up the farm and the family, and they'd planned for it as well as they could, with a grandchild inheriting so as to skip a generation of tax.

[evertonmint]

Our home is currently worth more than IHT threshold so our DCs will be liable assuming our circs don't change dramatically. I don't have a huge issue with them paying tax on our estate. They will already have had significant privileges wrt good education, middle class home full of books, all that gubbins. They don't need unearned inherited wealth on top.

Having said that, I think there should be exemptions for under 18s/other dependants. As it is we need to pay a lawyer to sort out some sort of trust for our DCs to cover this. If we don't, it's our failing - IHT is avoidable with a bit of work.

We are also both likely to inherit from parents whose estates will probably both tip over the threshold. Again I have no issue with paying tax on this.

The Treasury has to get its money from somewhere and I'd rather it is from inherited, unearned wealth (especially given there is a reasonable threshold in place so the smallest estates don't get hit) than having to charge higher income tax on lower wage earners.

[brettgirl2]

long tailed my parents/ in laws are about inheritance tax. I just don't get it.

Babe I don't know what 'young' means and I'm sorry you've lost your parents. Don't want v to get into a fight about the money side of something so horrible

[Teeb]

This is a concern for me. I live in London in a home with my 17 year old sister who I have been foster carer/her special guardian for the past ten years, she's doing her A levels right now. I have cancer and in all likelihood will be dead within the next 12 months.the only way my sister will be able to pay the inheritance tax on my estate is for her to sell our home and lots of my possessions. This makes me so incredibly anxious, it's quite possibly the worst part of knowing I will be dying soon, the mess I will be leaving her in, it keeps me awake at night.

[Spherical]

Since you are counting, Bearbehind, I'll add my vote in favour of inheritance tax and add that my child will be affected by it.

[Mimishimi]

I think it's wrong. People are already taxed on their earnings whilst they are alive. Why should they be taxed again? We know people who have lost lands etc because they were asset rich but cash poor and it's broken their hearts in some cases.