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.

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

Actually, I think you will find the 'noise' mostly comes from the elderly parents themselves, who have decided that they would like to be in control of what they hand down to their own children - hence inheritance only actually being paid by a fairly small proportion of people, with most stuff going into elaborate financial schemes to take advantage of the man loopholes.

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.

And zero sympathy for the fact that someone so young after undergoing such a trauma is then forced to leave the only home they know...money does not make up for that.

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

But imagine the impact on those children...I do not believe inheritance tax should be paid if there are dependant children.

Exactly, Collaborate..

Don't forget you only have 6 months to pay inheritance tax....makes the grieving process even more fun when combined with selling a house and moving. Fun fun fun.

The state does fund old age care - do you think they should stop care for all elderly then collaborate?

Inheritance tax and many loopholes that should say in my post!

That's not true formerbabe. You can pay it in instalments over 10 years on things that take time to sell.

www.gov.uk/paying-inheritance-tax/yearly-instalments

I stand corrected!

where do you propose they gat the funds for installments each year if they haven't sold the property and inherited anything?

Tax hadn't already been paid on much of my dad's estate.

No tax on increase of house price. No tax on mortgage interest when he was climbing the property ladder (thank you MIRAS).

His pension contributions weren't all taxed, and current pension contributions get 40% tax relief.

And as he was under the IHT threshold, there's still no tax being paid on his estate.

I really, really wish he had spent more on himself though.

Totally agree with stinkersmum. There's no incentive in this country to work hard and do well for yourself.

You earn money and pay tax on it, you buy things and pay 20% VAT on everything, you buy a house and pay stamp duty. Then you die and your estate is taxed again? Oh, and if you've saved any money and you need nursing care in your old age, you pay for that too.

iHT should be raised to at least £1m, if not abolished completely.

I think there is this idea that the 'children' are savvy manipulators who are preying on their clueless, vulnerable, frail parents and just waiting for them to die.

It's not true - in most casesit's is the parents themselves who consciously do the avoiding, they know perfectly well what they are doing, and just want their own children to get the best they can (whether this last bit is morally right or wrong is up for debate, but I think the picture painted by some posters on these threads is very inaccurate).

Really bf1000? At least £325k is tax free, so they need to raise 10% pa of any value over that and they own an unencumbered property worth £XXX

YANBU

totally

and I speak as a potential beneficiary/parent of beneficiaries

Tax has to come from somewhere. As a pp said, tax unearned wealth over that earned

I agree Aldi, it's the parents looking to avoid it.

That seems odd to me too. The current generation of elderly parents mostly had their Dc in their 20s and are living to 75/85?, so the "children" won't get their inheritance until their 50s. Good grief, I hope mine are "set up" before then.

Its not always elderly people dying leaving independent adult children who have their own homes.

Inheritance tax can affect much younger children/teenagers which is what I really object to.

To those who think there should be higher taxes on unearned income do you class pension scheme income as unearned? It would seem strange to tax people more heavily on their retirement income than their working income.

I don't know formerbabe. If children lose both parents, they will still get up to £650k tax free and 60% of everything else. Isn't that enough?

Pensions are taxable income. And I will have earned my pension by earning the money I pay into it.

YABU
People have already paid tax on this money - why should the govt be able to raid the money a second time?
As usual, this is a system which was put in place years ago and the limit was originally way above what most people had so houses/money could be passed onto children. Now it doesn't take a palace to push you over the limit, especially in London.
I happily pay my taxes - but this is the one tax that really gets my goat. They have already taxed people on that money and now they want another bite at the apple. It's a crap system.

That's exactly it though MiddleAged. If it's the kind of inheritance you describe, no tax has been paid - it's all come from property gain.

I don't know formerbabe. If children lose both parents, they will still get up to £650k tax free and 60% of everything else. Isn't that enough?

They may have to share with siblings.., but you miss my point. Its not about the money so much more the trauma of children with no parents being forced out of their homes. It is extremely upsetting.

I really hope that my parents have fun spending it, or use it for high quality care

Take my parents though. They lived frugally and saved a lot to top up their crappy pensions. They did not spend it on fun things, because they needed their money to last the rest of their lives- and the problem is no one knows how long that is going to be. My dad did not want to be in a situation where we had spent all his money having fun in his seventies, only to find he had none left to support himself (and he lived well on until his 80's) So he kept his money in the bank to support himself via the interest. He did not get to the stage where he needed to pay care costs, so when he died there was a lot of money left. A lot of that money is now going to the treasury in IT. He would have hated that after all those years of living frugally.

So yes, it is great to spend the money while you are alive- as long as you can know how long that will be so you can work out how long it needs to last!

That's fine for you. So give the equivalent you would have paid in tax to your favourite charity. I think the threshold for inheritance tax should be much higher. Around £5m. Not that I'm about to inherit £5m.

But they're not forced out of their homes. They have 10 years to manage that.