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.

foreverondiet but the point is that IHT replaces CGT (which is the equivalent transfer tax on a capital gain). IHT is paid by the estate at the point of transfer be ause it's historically easier to collect. You could theoretically just replace it with CGT on inheritance, except it would then potentially be easier to evade.

I'm sure there are plenty of rather nice "stupid" people who have unwittingly been caught out by IT.
And I disagree that it only affects the rich.
Even Dave Cameron thinks the threshold is far too low and that it should be raised to £1,000,000 to prevent a huge number of people being dragged into a tax which was never intended to affect them.
I will inherit some money after my DF dies. Doubt he has enough to push over the threshold but I do know that both my parents spent their whole lives working like dogs and doing without so many material things in order to provide for their children. My DM always talked about providing for my brother and me after her death. Both parents got nothing from their own parents at all. Ever. She took great satisfaction in knowing she would one day make a difference to our lives for the better. And I love her very much for her selfless desire to make things better for the next generation.
Was she greedy? I find it very insulting to suggest that her motive was greed. She was the most selfless person I have known.
I too will do whatever I can to make life as comfortable as possible for my children.

Plus CGT rates are lower!

CGT is currently lower, but at various points was a comparable rate to IHT.

There are arguments that we should have fewer taxes on earned income and more on unearned income/capital - the proponents of a land tax would certainly agree. No invome tax but swingeing taxes on capital transfers? It might all depend on who you think should end up with the wealth in society, really - should it be spread more equally across the population, or should wealth be more concentrated; should it accrue to workers, or should it accrue to those who already have assets?

I have to admit I'm a bit sceptical of the whole male nurse story. The facts are too button-pushing (what with him being a saintly nurse and everything) and the maths doesn't add up.

So the house was in her name? Completely? And they weren't married. But smart enough to make a will(or he wouldn't have got the house). Life insurance?

If the house had had £500k of equity in it then IHT of 0.4 * (500 -325) = £70k. This can be paid at a rate of 10% a year so he would have only had to find £7k in the first year. Did she really leave £500k worth of house equity but no cash at all? Could he not raise a mortgage on all that equity (as he has no house so no mortgage right now) and use that to pay at least some of the IHT.

Assuming he did sell the house to pay the IHT then he'd be left with £430k. Enough to pay rent on a house within reach of his hospital for many many years even if he somehow couldn't buy a house with all that money.

Obviously I don't know how much money there was - I just plucked £500k out of thin air - but if the house was worth less than £500k ten there really isn't much IHT to pay. And if worth more - well- then it would be easier to buy a house.

However, if it was true then it would have all been avoided by either the two of them getting married, putting his name on the house deeds or just purchasing some life insurance.

SirRaymon you're the one that sounds bitter, love. Bitter and grabby. And entitled. I pay huge amounts of taxes - more than the average wage - and am happy to do so. Not complaining and whining and trying to weasels out of my obligation to society. Unlike some.

Herc do fuck off 'love'.
I work hard for my money and I pay tax already. At a hefty rate. No 'weaselling' here. But I'm doing it for my family. And I'd like it to stay that way if that's alright with you.
I've paid my way in society. The only grabbing I'm doing is keeping hold of what I've worked hard for so that my children are secure.
You're the one with the chip on your shoulder.
Anyway I'm out of this debate. I'll certainly be looking into ways of safeguarding my children's inheritance.

Thus proving my point perfectly.

Only the richest 5-10% of estates are subject to IHT. I'm just shocked that there are people that can't grasped that £325k is an enormous sum of money and in half the country buys a very big posh house.

So it does only affect the comparatively wealthy.

Even if the estate is worth £500k to a million or more, the recipients still get to keep most of it, and it seems that there are provisions in place for them to pay the tax due over a very extended period, so the poor widows and orphans aren't kicked out on the street.

I am very wealthy compared to a lot of people. Mostly because I have never spent a lot on holidays drinking smoking and getting into debt. I have made sensible investments - all since the age of 34, when I got divorced. (am now 53). I concentrated for years on paying off my mortgage. Everything I have I have earned, I certainly was not born with a silver spoon in my mouth, far from it. It really pisses me off to think that my estate will be subject to massive amounts of tax when I go.

Well done you. Are you allowed biscuits or are you too busy saving for your death?

Flossy: why don't you do some tax planning then?

People have to ask themselves , should Inheritance tax be Hitting Wayne Rooney's offspring (£300k a week) or Head Teachers/ Doctors or Small Family Business Owners offspring with £500-750 K Homes.

Inheritance tax was not meant for these people, it was meant for the "Rich" which in the United Kingdom today is those with assets of over £30 Million $ or 18 Million Pounds Ultra High net Worth Individuals.

The very people Inheritance tax was meant for , are the very people who avoid it either by clever accounting, or by having enough money to move to Switzerland/ Monaco ETC for 7 years.

What the Labour Party does is have people calling Moderately Successful people "Rich" and bringing "Envy" to them . people who have a Moderately expensive house ( even in the North West of England £750K is no great shakes any more).

To whoever said this affects lots of average families, it doesn't. IT only applies to 5% of estates, so the very richest. Another tax cut for the very richest?

"Inheritance tax was not meant for these people, "

Absolutely wrong.

1933: Average house price (not weighted) £530, estate duty threshold £100
1946: Average house price £1459, estate duty threshold increased to £2000
1954: Average house price £1970, estate duty up to £3,000
1962: Avg house £2950, estate duty £4,000
1963: £3160/£5000
1969: £4640/£10k
1971: £5632/£12.5k
1972: £7374/£15k
1977: £13650/£25k
1980: £23596/£50k
1982: £23664/£55k
1983: £26471/£60k
1987: £40391/£90k
1988: £49355/£110k
1989: £54846/£118k
1992: £61336/£150k
1996: £70626/£200k
2006: £204813/£285k
2007: £223405/£600k (transferable nil band introduced)
2009: £226064/£650k (transferable nil band introduced)

The actual average house price today is £168,356. So basically four times the average house price. We have the most generous IHT threshold today EVER. Only 1996 comes close.

Because it is mine, I earned it and I will do what I like with it, i.e. give it to my children.

Yes it is selfish, I am and I have no intention of paying a penny more in tax than I absolutely have to, I view it as a game - would rather spend the money on lawyers/accountants than hand it over in tax.

I guess all those who agree, are those who have never been in this position. My FIL died- asset rich (decent house) but cash poor.
He left my husband a house worth 500,000 and the IHT rate kicked in at 230,000 (just before an increase), and nothing else- bar almost enough to pay for a funeral.

We had to pay for someone to come and in peruse the house and guesstimate how much ornaments/pictures/clothes etc were worth. Eg a model my FIL built (his hobby) was valued at 100quid. So we had to pay 40 quid on a output from late FIL hobby.

Then you get 6 months from the date of death to pay tax on the property you have inherited. Not sold? Tough. You still pay and if you have to pay in installments cos you don't have a spare 80k, you pay TEN percent interest on every outstanding amount. We nearly were bankrupted over this, and could not even get a loan. We had to sell everything we owned to pay 2 years worth of installments.

Good thing neither of us died while we struggled to sell in the very depressed house market....otherwise our estate would have been liable to pay the IHT and then our daughter liable for another 40pct on our estate- which would have included the asset from her grandfather. Oh and you cannot undervalue to make a quick sale- tax is at the government valuation.

It is a pathetic jealous tax. Even if you opt to not inherit, you are still liable.

Only the very rich are OK as they have clever tax avoidance schemes, so it is the middle group who are clobbered.

Sorry that's not the case. The interest rate on IHT is 3%. Which is basically zero, in real terms. It hasn't been 10% since 1991.

And it's been 5% or less since 1992.

It's also not true that you can't undervalue, you have four years from the date of death in which to submit a claim for a refund if the eventual sale price is below the official valuation.

I don't think you can say 3% is 'zero in real terms' though can you? When it could be 3% of 100k or up to 500k and beyond, you are talking thousands of pounds. Do you believe people have instant access to that level of money?

In my situation I believe the best option available is marriage and good will planning, as I've left it too late to muddle about with trusts even if I wanted to.

Only the very rich are OK as they have clever tax avoidance schemes, so it is the middle group who are clobbered.

That's not true. Inheritance tax planning is available to anyone who wants it. DHs parents have arranged their finances so that DH doesn't have to worry about IHT. I've always thought of them as pretty rich to have assets over £650k but according to some on this thread they are not.

Sorry Aga, do I sound like an arse? I had had a little drinky...

. Inheritance tax planning is available to anyone who wants it. DHs parents have arranged their finances so that DH doesn't have to worry about IHT.

Not always the case, it depends very much on personal circumstances. Just because it applies to your DHs parents doesn't mean that it applies to everyone. And all the planning in the world doesn't help if you don't live another 7 years, and that's just down to luck!

I just don't see the point of a tax can be avoided by some and not by others . And to the poster who said it applies only to the rich or stupid, that really is very insulting.

If you think assets of this value don't make you wealthy you are deluded about what the majority of people in the country have.

Also if you think you've paid your fair share already you are likely to be wrong- isn't there into to suggest the vast majority of individuals are net receivers from the state? I will try to dig it out later.

I think there should be a delay for the main home of dependents I suppose. But I can't feel that much sympathy for people missing out on their unearned inheritance to the tune of 40% over and above a huge amount.

Given that the first £325k is tax free, and represents 13 years income of the average UK household, I won't get too hot under the collar about inheritance tax. I just wish there were ways so that it wasn't "voluntary", i.e. so easily avoided by those who can afford crafty tax lawyers.