To have no issue at all with Inheritance tax?

[RiskManagement]

I really don't understand the objections or the frenzy to find way to avoid manage it.

My parents are professional people, been frugal all their lives. I have no idea what their financial situation is but I know there are some investments and they own their home in the SE, so should the worst happen, there will be a substantial sum, which AFAIK will go to DSis and I.

My main hope is that they live such long and active lives that it's all spent by the time they go. If they should need it I hope they can pay for good quality care. However, if there is anything left we will get £325k between us tax free. If there's more than that, why on earth shouldn't tax be paid on it?

On the basis that tax has to be raised somewhere, this seems like a relatively painless way to raise it to me. I'm not expecting anything, I haven't earned anything, if I get something, I won't object to paying tax on it.

Because tax has already been paid on it?

I'm with you, RM. Especially the bit about spending it on themselves and on good quality care as needed.

But plenty of people seem to get bent out of shape by inheritance tax.

The best I've seen was someone claiming that taxing money you'd earned by the sweat of your brow was fair enough, but taxing freebies was "breaching the social contract".

Make what you will of that!

YANBU

I don't understand the problems with it either.

I've heard it called a "tax on the dead" and I don't see a problem with that. The dead don't need money.

Some people say they want all their money to go to their children to "set them up." I always wonder why they think their children are incapable of setting themselves up.

Many people never inherit anything and they do just fine, so I don't see why some people should gain large sums of money tax-free.

I think it's a good way of re-distributing wealth.

You will actually get £650K between you tax free, and 60% of anything over that between you. So it the leave £1m, you'll get £430K each and the taxman will get £140K.

I'm with you OP. So what if tax has already been paid on it. I pay tax on my salary but the money I'm left with is taxed again when I buy stuff, VAT, fuel tax, etc etc. It's not unusual.

Not really Purple, as a very high % of people's estates are property gains.

I agree with you Incredible. If it's a tax on the dead, that's a pretty painless tax. AFAIC my parents "set me up" by making sure I knew how to make my own living.

The big problem with inheritance tax is that so many people avoid it and, if you have enough wealth to pass on, it is incredibly easy to avoid. This means it is a fundamentally unfair tax as it is only paid by those in the middle who have enough wealth to be above the threshold, but not enough that it makes sense to pay for the tax advice to set up trusts, etc.

It would be far better if the tax rate levied was cut substantially and all of the loopholes abolished.

I don't expect it to happen though as it creates so much lucrative work for tax lawyers.

You will need to find and pay the inheritance tax before the estate is closed meaning. If there is 50k to pay in inheritance tax - you either need to have 50k in the bank or raise this money. Some people can't borrow enough money and so are unable to get their inheritance.

If they are ill the money will come from their savings and investment to pay for that care BUT the care will not be better quality care than if they had squandered money their whole life as those people still get the same care provision for free.

And as already said they have already paid tax (when the money was earned, they have been taxed on savings, taxed on everything they have purchased, if they have sold properties then they will have also paid capital gains tax.

In some areas even 1 family home can take people over the inheritance tax limit.

Most importantly they have probably done without in earlier years so that after their days their children / grandchildren will have something.

yanbu at all. I always think about this.People get so grabby about inheritance and its wrong, its basically money you are getting for nothing, why shouldn't it be redistributed a little bit?

YANBU.

Regardless, I'm hoping my DF spends all his money on Diamond White and cocaine before I get a look in.

I'm with you!

Really don't understand all the fuss about it. Since not everyone gets it surely its just a nice added bonus and should be taxed accordingly?

But then I'd like to see a world where inheretance was 100% taxed and redistributed fairly to the youth. Say an education/ buisness start up/ home fund at the age of 18/21/25. I don't really think its fair that because your parents did well you will be automatically set up. Wouldn't it be nice if everyone could be set up without relatives having to die?

It's the one tax that I do have a problem with. As a previous poster has already said, the person who dies has already paid tax on his estate via income tax etc and I see no reason at all why the state should take another cut.

For a bit of context I should probably add that we will never inherit anything and our own estate is far too small to pay inheritance tax on, so it's not just self interest talking.

I also have no issue with paying for my own care in old age and if our house has to be sold to pay for it, then so be it.

YANBU op. I have exactly the same debate with dh and mil (we do get in very well).
I think, however, that inheritance tax should be scrapped altogether so people can stop all the whinging about 'tax on the dead' etc. I think that instead, every beneficiary should pay an 'inheritance windfall tax' on anything they receive over, say, 100k.
No one should need to receive such naice lump sums tax free. I really hope that my parents have fun spending it, or use it for high quality care rather than worry about how they can avoid having their estate taxed after they're gone.

I agree. The bulk of many people's estates will be property appreciation. The increase in value will never have been taxed.

I would be inclined to scrap the IHT threshold, have a lower rate up to the 325k or 650k if you're married and have the IHT paid on the difference between the indexed cost of the asset and the market value at time of death.

Maybe bring it inline with the cgt rates, so 18% or 28%...

In fact, make death a chargeable transfer for cgt purposes.

Meh, in theory I think people should be able to leave whatever they want to whoever they want, without the state getting involved.

Having said that I do think its a bit that the Tories have said there is no money, difficult decisions blah blah, but have also proposed to raise the IT threshold to a million quid!

So I am on the fence really about it. I predict that this thread will get to about 300 posts of people arguing, with neither side changing anyone's mind!

On the basis that tax has to be raised somewhere, this seems like a relatively painless way to raise it to me. I'm not expecting anything, I haven't earned anything, if I get something, I won't object to paying tax on it.

Well how would you feel if you were 19 let's say and still living at home and your parents died? You'd be forced to sell your home after being orphaned.

What if a home is in the name of one person who is cohabiting and has small children...said person dies and their partner and young children are forced to sell up and leave their home.

I agree, if people are lucky enough to inherit £325k+ why shouldn't some of it be redistributed to those less fortunate? So what if tax has already been paid on it, the recipient hasn't paid anything.

^massive^ lump sums. Although could be used for something 'naice'.

People don't pay capital gains tax on their family home so it isn't money that has previously been taxed!

House price value increases is luck.

I think there should be much higher taxes on all unearned income and much less on all earned income.

Obv this doesn't apply to firesidechat, but isn't it funny how those that think IHT is wring also think the state should fund old age care? But don't worry about the cost. The young will pick that up. Like tuition fees, soaring house prices, later pensions etc etc.

How come those being forced to leave their homes because of the bedroom tax are looked on with pity but those who are forced to move from their homes to pay inheritance tax aren't?

Hmm. The 19yo would only have to sell up if the house was worth a lot of money, more than enough to buy something else, wherever he is in the country.

The co-habiting partners is why marriage is still more important than people like to admit, if you're going to have children.

And, let be real, the "noise" about IHT is mostly from middle aged people with elderly parents.

I think there should be much higher taxes on all unearned income and much less on all earned income.

Totally agree with this.

How come those being forced to leave their homes because of the bedroom tax are looked on with pity but those who are forced to move from their homes to pay inheritance tax aren't?

Because if they have to pay inheritance tax they've just come into at least 325k?

Hmrc allow payment by instalments in cases where the asset would need to be sold to raise the IHT, I beleive.

I keep telling my mum to sell her house and spend all her money whilst she can - world cruises, daft hobbies etc. But she doesn't want to. Any inheritance that might be left for my siblings and I, plus grandchildren won't be enough to be affected by IT but I think it's VVVU. My parents have worked hard, and they've built up what they've got by themselves, for their families when they're not here any more. TBH, the reason my DH & I own a property is so we have something for our dc to have when we're gone. I don't see why anyone else should benefit further from our estate any more than they already do by the substantial contributions we've already made and will continue to make the rest of our working lives.

Totally agree OP.
And it is not a tax on the dead. It is a tax on those who inherit and receive unearned income.