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.

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.

Well yes, but if your really expensive house is purely down to London house price inflation, then you haven't 'already paid tax' on it have you?

to be in a situation where we had spent all his money having fun in his seventies

He not we. I did not help him spend any of his money!!!

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

But loads of people benefit from house value increase- eg- someone selling a small flat in London that they bought for much less 20 years ago could take 100% of that increased value and put it towards a massive place in another part of the country. They are not asked to pay any tax on the increased value of the property that they have not earned. If it is the rise in property values that is pushing people over the IT threshold, why , in the interests of fairness, don't they just tax every property transaction where the property has risen in value and a profit has been made?

I just can't find it in my heart to give a shit about people getting hundreds of thousands in inheritance whinging about giving a tiny bit back.

I don't get the hatred of inheritance tax, either. Especially as it doesn't kick in until an estate reaches £325k. It seems to me to be a perfectly fair way of somewhat reducing wealth inequality, tbh (redistributing so that people with rich parents are not even more privileged than they already are over those without). And given that spouses and civil partners are exempt and that thresholds can be transferred, the argument that it forces people to sell their homes to pay it is very weak indeed.

My brother and I keep telling our parents we want them to concentrate on having a good later life rather than trying to 'leave something to the kids'. They are my parents, they have already given me so much more than an inheritance could ever be worth.

I completely agree that tax should be paid on a proportion of inherited (free) money - I don't exactly think the current threshold is fair on people living in London but I can see the argument for it staying as it is.

I would, however, be absolutely furious at anyone suggesting the threshold should be lower or that inheritance should be taxed at 100% as some people wish. I have a child with SEN who will be quite likely to never work. As such, we have gone without holidays, spending on ourselves etc for years, to pay our mortgage off early, saved what we can and paid into pensions etc etc so that when ww we die, ds will be able to live somesomewhere for free and receive a small pension income, making him much less reliable on the state financially.

It would be morally wrong and a waste of the state's money to take our house off ds and then have to support him with benefits.

If you owned your own home, you might feel differently about it.

I do own my own home, and support inheritance tax.

I do own my own home Stinkersmum and it was paid for from earned and taxed money and due to spectacularly bad timing twice, there's very little property inflation in it's value. I still don't object to IHT.

I own my home and support inheritance tax.

Isn't it weird to think that a dead person can pay more in tax than the likes of Amazon?

So an 18yo, still In FT education, family home in London or SE, likely to be in education for 3 to 5 more years has to sell the home she has grown up in? And cope with bereavement. Even after ten years she's unlikely to.be earning enough to pay that tax.
I don't disagree with IHT at all, but I do think there should be a scheme for deferment in some cases perhaps fifteen years rather than ten

I speak as someone from a family that had estates etc
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I also support the idea of inheritance tax. I and my DB inherited a house that had been purchased for less than £5k and that we sold at over £500k. My DM and DF hadn't benefited from this increase as they had lived in the house until their deaths. DB and I benefited. And as their total estate was just below the IHT exemption limited we paid no IHT.
If we had been selling a buy to let house that we had bought, we would have had to pay CGT (I think)

As an 18 year old I left home to go into full time education and never had money from my family ever again, except small gifts on my birthday and at Christmas. My best friend at Uni had his last parent die at aged 16 years old. He had no inheritance at all.

If an 18 year old is bereaved, £650,000 plus 60% of anything over that, is more than enough to support them until they can earn a decent wage.

I do not support inheritance tax on small estates. My own parents were left destitute by their respective families and one of their big financial goals was to be able to pass on rock-solid financial security to their children and never to let their families down the way they were let down by their own. This meant that we went without a lot when I was a child, because they worked to pay off our home, save, invest, save, invest etc. To have the right to pass on fruit of all that hard work exactly as they wish denied them is ridiculous. But of course, it isn't denied them, because they have the wit to set things up properly.

And that's part of the problem - in practice, it's only a tax on the naive, which makes it a very unfair tax. And a person dying and leaving a house worth in excess of 1m isn't any particular indication of vast wealth any more anyway, especially in the SE, so the threshold HAS to be raised.

It would be interesting to have statistics of the number of wills leaving estates worth more than £325k/£500k/£1m/£2m over the last 20 years.

Does anybody know when the current threshold was actually set? I bet that if the threshold was raised proportionately to house price increase since then it would be well over £1 - 1.5m.

A £1 million house is a very expensive house, whatever some MNers seem to think. And inheriting £1 million is a considerable sum of money to inherit.

Incidentally many parents go without simply to feed and clothe their kids. That isn't unusual.

Good for you morage. peppermint doesn't.

It's still classed as a 'middle class' tax by the media and most people on MN - and lets face it, anyone viewed as middle class right now is generally treated as a criminal who burns £50 notes for fun and laugh at poor people.

My DH & I aren't middle class. We're working class, but worked hard, pay taxes (DH has been in the 40% bracket for the past 20 years), pay VAT on everything we've bought to improve the house etc etc. Its not a big house at all, and it's not in London, but it's value is over the threshold. If something to happen to us, why should our dc have to pay more into public coffers? Wanting to leave what you've worked for to your dc is normal no? Why is it viewed as selfish? Or 'grabby'?

[https://www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds/inheritance-tax-thresholds here]] NotYouNaan

It has increased pretty substantially, not sure if it's quite enough to keep pace with house price inflation though, but of course that depends where you are in the country anyway.

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If we are talking about taxing unearned wealth, I never understand why Lottery winners are considered the only people coming into a large sum that they deserve to keep tax free. (and yes, part of the ticket sales have been paid in tax, but the person who wins £1million keeps every penny, the person who gets a bonus at work of £1m or inherits a property worth £1m has to pay tax)

The biggest down side of IT is it warps behaviour, people try to avoid it, so it's unfair, because how much you pay depends on how much effort your parents put into avoiding it.

It also encourages otherwise fruggle people to spend the money rather than it go to pay taxes, which is fine if you drop dead suddenly in your late 70s, if you need care for 20 years, having a tax system that encourages older people to spend heavily/give away a lot of their assets to DCs in their late 60s/early 70s is causing further problems for the state.

The house price inflation issue is a red herring - because we all still need to buy homes. Nobody sees a penny out of house inflation income until they down size.
And kids now have to find huge multiples of a double salary to buy a house rather than triple of one income we our parents did.
So if our parents have benefited from house inflation, the next generations are suffering hugely. So being able to pass this money on to them seems fair. They are the generation paying for the insane housing market - so who would begrudge them some help to get started?
When we bought our first house the price fell within the inheritance limits and young people could afford to buy homes.
Now our house price has shot up so we can't leave it to them without tax and they can no longer afford to buy a home.
That's why the tax man should leave well alone.

I agree inheritance tax makes rational sense.

It's a red herring to say it's taxing it twice, there's no rule that says money only gets taxed once. Money is taxed every time it changes ownership, so it is perfectly logical to tax it when it passes to children, even if was the proceeds of taxed income when the deceased gained it.

I think the dislike comes not from the potential beneficiaries, but from those leaving the money. Their net worth is a measure of what they've achieved over the course of their life, something they're proud of, possibly something they've gone without to achieve, and the idea of a large chunk of it vanishing in a puff of smoke overnight diminishes their achievement. I think that for this reason, IHT would still be resented even if the potential heirs didn't need the money.

The dislike of IHT is a deep-rooted emotion, so you are never going to persuade most affected people to like it, even if you force them to admit it's a rational tax.

Now that pensions can be inherited, maybe the solution would be to allow the whole estate to be paid into a pension scheme after death, then passed down as any pension scheme can be. There would be no tax relief on estate money going into the pension scheme, just avoidance of IHT, and when the money was withdrawn it would be subject to income tax under the same rules that govern any inherited pension.

I don't agree with that MiddleAged because it's only a few who get help with buying those properties through inheritance and most people are well on their way up the housing ladder before they inherit.

Yes, in certain places £500k won't buy you a particularly special house but it's still a huge windfall. And, if your married parents leave £500k, there's no tax to pay on it anyway.

Sorry, the point of my proposal was that it gets rid of the sudden confiscation of net worth that people find so emotionally difficult, and replaces it with something more diffuse, that is harder to resent.

Oh I'd tax lottery winnings too.

In fact, any sort of windfall would be taxed. Any gifts over a certain amount with the exception of those being used for house deposits or business startups would be taxed.

As a country, we seem to take off those who have the least through cuts, whilst people who come into significant sums of money, whether that be good luck or bad, don't have to pay a penny, and 650k is a significant amount of money in anyone's book.

YANBU.

I think inheritance tax should be taxed as income on the recipients. so if you leave £1million to 100 people, they will get £10K each and don't pay much tax. but if you leave it all to 1 person, they pay 40% tax just like on income. because the inheritance is essential an unearned, unworked-for income for the person who receives it. And one that sets up massive, structural unfairness in society.