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.

[Viviennemary]

I think the threshold should be raised so only the very rich pay it.

[formerbabe]

But hercship, the point I'm making is that if we live until our 90s, our kids will always be able to come back to us if everything went wrong for them. Once your parents are dead, you have no safety net...its quite scary. I know many independent adults who have gone through divorce/job loss etc and first place they go is back home to mum and dad.

[Teeb]

Thank you to all who have offered their best wishes, it's very kind.

Of course everyone will have their own tale of how it impacts upon them, it's human nature to see the world through our own eyes and want the best for us and our own. Like I said briefly in a previous post, I believe inheritance tax should be an extension of an income tax. So any items you sell and gain from, there should be a tax upon. A home you choose to rent/sell or btl properties, there should be inheritance tax upon the income. But should there be a tax on paintings? On a car? Family jewellery? A piano? A young persons home? I don't know. I know I didn't expect not to see my 30th birthday, with hindsight though I should have been more considerate in my planning when I chose to take on the responsibility for my little sister, I do feel that I'm failing her.

I think most parents hope to support their children in many ways through out their lives, through their education and university, their first flat, weddings, a deposit for a first home, grandchildren etc.when a parent dies before these life events happen, that support both emotionally and financially is taken away.

[SirRaymondClench]

Why should people not inherit? If I've earned my money honestly, I should be able to do what the fuck I like with it surely? If I want to leave my house to my children, I should be able to do so without them having to sell it just to pay some tax. Isn't that the point of working hard in life, to provide for your children or grandchildren?
There are some very bitter people about.
Those that don't want to provide for your children after you've gone are pretty weird. Surely it's a human trait to want to look after your own, as opposed to want to pay the tax man.

[dreamingofsun]

i agree. i have to pay tax on money i earn, so why shouldn't someone pay tax on money they don't even put any effort into getting.

i also agree with the arguments about social mobility - inheritance reduces it by keeping money in families.

[formerbabe]

The whole 'make it on your own' is not so common nowadays. Everyone I know who owns their own home has been helped to do so by their parents (alive or dead).

[Oriunda]

I have a life insurance policy in favour of DS. I've completed a form of Absolute Trust which leaves it outside of IHT (need to nominate trustees though). Any parent/carer can do this if they are worried about IHT.

[MaryWestmacott]

So sad to hear what you are dealing with Teeb.

For me, I think property shouldn't be taxed if someone lives in it, if it's their home too - that just seems unfair. A house is only worth what someone will pay for it, if you can't sell it without becoming homeless, then the value of it is pointless.

I also think the total pot shouldn't be taxed, but what people inherit each, not the dead person's estate who pays it, but the beneficiary taxed on actual amount they recieve (and not taxed on 'stuff' - agreed that family jewllary or paintings shouldn't be taxed like cash in the bank). This might also have the effect of encouraging people to spread round their inheritance.

[Mumoftwoyoungkids]

I expect to pay significant IHT when my parents die. Currently me and dh's assets are below the joint threshold but I expect them to go above in the next 10 years (and I don't expect to die in the next 10 years) so I am affected both ways.

I approve of IHT. The way I see it is that I am comfortably off. The state will want to get that money off me at some point or other so I'd rather my inheritance from my parents and to my children is reduced than I pay a lot more income tax and my children have a less nice life now.

The other option for us is to emigrate somewhere with a lower tax regime. I work for a multinational. It wouldn't be that hard. But we don't want to. I like living in a country with an NHS and a welfare state. I really really like it.

teeb Your situation is really sad. I second the advice from others about seeing a lawyer. Just a couple of thoughts - do you have any life insurance (possibly attached to your job that you don't pay for and so barely register it is there) or a pension? I have a vague feeling (remembering something I read years ago) that it is important to prove financial dependency. Which presumably you can for your sister.

I think there probably is a solution to keeping your sister in her home for the next few years - some form of deferred mortgage or something. Hopefully the lawyer can point you in the right direction but if not it might be worth contacting some mortgage companies to see.

[MorrisZapp]

If my parents avoid ending up needing expensive care, then I will pay IHT on what they leave. It's fine by me. Anything I get is a bonus, and my share of 325k plus sounds like a very tidy sum!

It isn't a double tax, as I haven't earned the money, and it is I who would pay the tax, not my parents.

[Budgiegirlbob]

Surely the fact that IHT is avoidable in some circumstances makes a mockery of the whole thing. A couple could live in a house, worth say £1m, but be cash poor, and cannot therefore 'gift' anything to their children.

Another couple could live in a house worth £500.000, with £500,000 in the bank. The estate is worth the same, but they can gift their cash to their children, which means that there would be no IHT due upon their deaths (assuming they live for 7 further years).

How can that be right or fair? Or they could blow all their cash on holidays and the high life, ok they'd pay some tax on that, but nothing like 40%.

I'm against IHT, mostly because it seems to affect some people adversely, just due to their personal circumstances.

It's outdated, and no longer achieves what it set out to do.

And to those who say that their children can stand on their own two feet, would you feel the same if your childrens circumstances changed. What if they could no longer work due to illness or disability, through no fault of their own, would you not want to be able to pass your money on to them then? I know I would .

[Mumoftwoyoungkids]

teeb I've just done a speedy google and as a minimum IHT on a property you live in can be paid over 10 years in equal chunks. Will that help at all?

[GillTheGiraffe]

The jealousy on here at some folk having worked their asses off to be able to leave their kids some money, is quite horrifying.

[Georgina1975]

Tax should be used as a tool to redistribute wealth. So I approve of IHT from that perspective. It is not as if there is a "tax man" that gets paid, it is the state that gets paid. How that money gets used is a whole different matter but we do have quite a bit of levy through, by example, voting.

There is also this notion that a good deal of the wealth that would make estates liable to IHT has not been earned in the narrow sense. Like housing or stock investment, it is a benefit - I mean the gain above the original purchase price - derived from broader economic conditions. Therefore, it is right (morally at least) that a proportion of this goes back into a communal pot.

What I really object to is this notion that "I work hard and therefore I/my heirs deserve this"...I just think it is incredibly selfish. I know plenty of people who work hard and have fuck all, and will have 100% of fuck all to leave their kids...

[evertonmint]

Bearbehind - yes, I agree which is why in my post I qualified my statement about my children already having privileges by saying I thought there should be special exemptions for under 18s/other dependants, exactly for situations like teebs's.

It's also why I said we need to sort out a trust for our DCs to prevent them losing out if the worst happens while they are still minors/in full time education. In the absence of govt concessions on this, it's my job to do it.

[Anchorage]

When a neighbour died suddenly, leaving her partner to bring up two children under the age of 9 by himself, I can assure you that it didn't help when he lost their family home because of inheritance tax, leading to him also losing his job because he was no longer able to love close enough to central London to enable him to do the shift work (being a nurse). Didn't help the kids either, losing their mum, their home, all their friends. Next time I see him I might ask him what he thinks about IHT.

[evertonmint]

But budgiegirlbob, my DCs WILL inherit my estate, they just won't inherit every single last penny. They wont be penniless - they will still be better off when I die than somebody who inherits nothing. I'm not advocating that DCs can't inherit; I'm just saying I don't mind them paying tax on that unearned wealth. And if there are special circs (minors, disabilities etc) I can set up a trust to mitigate the effects of IHT.

[traininthedistance]

Budgiegirl, but if those people with a £1m house wanted to, they could sell it and buy a 500k house and gift 500k to their children, no?

I don't understand the fetishisation of houses in the UK. It isn't anyone's right to have a particular house, whatever it's sentimental value (provision for living circumstances for minors might be a special case, though - though AFAIK in those circumstances setting up a trust for the minor would allow deferral of IHT - any solicitors on this thread might be able to confirm if that's the case....) One might wish to be able to keep one's childhood home for sentimental reasons, but why should that confer some kind of right to it? There are lots of people in this country who would like to own homes and can't because of the property bubble: why should the lucky beneficiary of comfortable parents retain a right to something they haven't earned themselves, just because it's a house?

[Georgina1975]

As soon as I had a child I thought I must get will, death in service benefits, life insurance and trusts etc... sorted out. That was 5 years ago and I still have not sorted it fully. It is a job that I keep putting off. I think that is true for so many people.

It would be useful for a campaign to highlight the issue of planning in the event of death - especially for people with children.

This has given me a good kick up the arse to get my own house in order.

[GillTheGiraffe]

Do you ever stop to think about what the Government does with all this tax?

I don't mean the 'good stuff' like education and the NHS.

I mean the crap the Governemnt wastes our money on such as air craft carroers that will be built but never used, like helicopters that are bought but can't fly when it's cloudy, like the expenses paid to MPs so the then Home Secretary's husband can order porno videos, like the over-generous pay-offs to BBC staff when they are made redundant.......

So you think that it's better for the Government to tax inheritance and use it for crap like that? It doesn't all go to 'good causes' you know.

[evertonmint]

But you can say that about any tax Gill. It's not an argument unique to IHT.

[Ericaequites]

Having to pay inheritance tax can force family farms and small businesses to be sold. The government takes too much from earners, and subsidizes antisocial behavior.

[traininthedistance]

Anchorage - married couples or civil partners can transfer all assets tax-free, so your friend suffered through not being married, sadly - though if he jointly owned the house that would have made a difference too - was it that she owned the house and he wasn't on the deeds? But if it was over the threshold enough to have to sell it to pay IHT it must have been enough to sell and buy something to live in, no? It's a very sad story but it still doesn't convince me that inheritance tax shouldn't exist at all.

[DharmaBumpkin]

LongTailedTit working farms qualify for Agricultural Relief as long as the farmland is worth more than the dwellings. So unless your friends owned a country estate type house, the Ar rate should have been 100%... No inheritance tax to pay at all.

[formerbabe]

It certainly shouldn't exist when the deceased person has left dependent children.