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.

of course they are being taxed twice. earnings that paid mortage would have been taxed .

If it is so important for the government to leap in an ensure that anyone who is lucky enough to receive a windfall contributes a sizable chunk of it to them (before they set about taxing it again if it is enough to earn that person an income, and taxing it again if it is used to pay for products or services, and taxing it again if it is used to buy a property, and taxing it if...) shouldn't they also be leaping onto lottery winners and grabbing a big old share of their winnings too? Lucky bastard Euromillionaires, take 40% off 'em!

Personally I don't consider myself as earning money just for myself, I think about it as earning money for the benefit of my family. I therefore feel perfectly justified in ensuring that in the unfortunate matter of my death my family won't find themselves suddenly robbed of a sizeable chunk of the money I've been earning for us all. Hopefully they will do the same for their children, if they ever have any.

One person dies leaves estate (1 house) to great nieces and nephews who are young adults ATM.
House is worth (valued) at 1 million

Leaves 675k to pay inheritance tax on which is 270K Inheritance tax between them before the house can be put on the market.

Once this is paid and house is sold it would in theory leave 730K inheritance.

If you are rich you may have this money in the bank.
If you are not 270k is alot to borrow from the bank (if they will even lend it). Imagine you take out 1 one yr loan to pay IT. The house sells in 6 mnths - you pay off loan and interest and you still have a lovely nest egg.

Imagine this - the house does not sell for years. You have to keep reducing the asking price. Your interest for not paying back the money has sky rocketed. You are suddenly in a terrible debt situation

I don't understand the argument about being taxed twice. Everything you buy you pay VAT, even though you already paid tax.

It would be strange if this wasn't taxed especially as the person earning has done nothing except be lucky to have parents who have something to pass on.

Hmmmmn. You don't expect anything but you have carefully worked out exactly how much you'll get?

I agree with you, OP. DSis and I stand to inherit a decent amount from our parents - they started out with nothing, but worked hard, made some wise investments and benefitted from the huge rise in property prices.

I wouldn't resent any future inheritance being heavily taxed the slightest bit. I haven't earned that money and I'm not entitled to it. Whatever I do get will be a bonus, and I will be grateful for it, but I know that my parents would be proud to pay their dues to society as well as leaving a legacy for DSis and me.

I will be doing whatever I can to ensure that I have something to pass on to my dd when I die, but I wouldn't want her to think that she is entitled to anything - I will be encouraging her to be financially self-sufficient, as far as she possibly can be!

What Pepper? I haven't carefully worked out anything. In fact as PP pointed out my interpretation of the limits was all wrong and I could actually get a lot more than I thought tax free, but I have no idea how much there might be anyway.

I have issues with the timing of paying the tax, as has been raised on this thread.

I have some issues with unfairness. E.g. I once worked on something with elderly spinster sisters who had a house in Notting Hill. Worth a pittance when they bought it. Worth millions now in their 80s. They were very worried that, when the first of them died, the other would have to leave their home to pay the tax.

But generally speaking, no, no issue. For me to by worrying, I have to be leaving my kids quite a sum in the first place. And quite frankly, as we all live longer this idea of passing a valuable sum to yoru children gets more and more irrelevant. My parents are in their 60s and haven't yet inherited. I am in my late 30s. When my own grandparents finally die, the generation ready to be 'set up' would be some of their grandchildren (I have much younger cousins) and great grandchildren. That's quite a remove to be relying on anything.

The 'taxed twice' argument is rot. We are routinely taxed multiple times. We pay income tax on salary, which we spend on goods which are subject to VAT. Or on houses subject to stamp duty, etc etc.

4got10,

The point I was making is that if you leave £100K in money you have saved, if all that money was saved out of income earned in excess of £150K, then you haven't paid £45K tax, you've paid £81K odd in tax.
Because the £100K you're leaving is 55% of what you earned.

So, you earn £331,818.18 before tax (very nice, well done). You use the first £150K to live on (and pay tax on it), and you have £181,818.18 left. That gets taxed at 45% leaving you with £100K.

TTWK. I get what you are saying. I didn't explain my post well but I think we are saying the same thing effectively.

Suffice to say it's a shit load of tax which is good news for my DC as we get much more pleasure giving it to them whilst we are alive and can enjoy seeing them benefiting from their early 'inheritance' rather than 'saving' it for the tax man.

I'd like to point out that all my adult DCs are hard working and responsible. They appreciate that they are fortunate.

"There's no incentive in this country to work hard and do well for yourself."

Don't talk rubbish. These are the incentives:

• longer life (yes - well off people live longer, healthier lives)
• better housing
• better education for your children
• less/no debt
• better diet

etc etc. Really - middle income people in this country aren't going short of the good things in life.

Nicole Don't talk rubbish. These are the incentives:
- longer life (yes - well off people live longer, healthier lives)
- better housing
- better education for your children
- less/no debt
- better diet

That comes across as really patronising to the majority of people who are not on the breadline but who have bothered to get themselves qualified and a decent, but not megabucks job. The UK is, compared to most countries, a very rich country and they will already have these things.

The problem comes when you realise that working harder/getting promoted/having more stress at work will only result in you getting half of any subsequent increase in salary. So if you were awarded a £6,000 pay rise, you would get an extra £250 a month. Now I am fully aware that to a lot of people that's a fortune, but there comes a point where it is simply not worth driving yourself into the ground to achieve, precisely because it will have almost zero effect on all those "incentives" you list above.

So you have the ridiculous situation of a couple of decent combined salaries of £70,000 per annum being able to afford to buy only a small 2 bedroom flat in most towns and cities where there are good jobs, based on income multiplier for mortgages. Meanwhile, the individual who got less qualifications at school, has a less good job and whose partner doesn't go out to work, but who has chosen his/her parents wisely, get a leg up onto the property ladder either to avoid IHT or because IHT is not high enough.

This then contributes to putting property prices still further out of reach of couple a.

bluegrass Personally I don't consider myself as earning money just for myself, I think about it as earning money for the benefit of my family. I therefore feel perfectly justified in ensuring that in the unfortunate matter of my death my family won't find themselves suddenly robbed of a sizeable chunk of the money I've been earning for us all. Hopefully they will do the same for their children, if they ever have any.

The problem with that is that its inherently selfish to society, justified on the basis that you want to help your family. Yet everyone has to pay income tax to help people they don't know and most likely will never know, from their own labour.

So it gives certain families a benefit over other people, who may be more deserving or harder working. And that isn't fair, contributes to inequality and isn't good for society. Because it doesn't reward hard work sufficiently over luck of being born into a certain family.

I consider my children extremely clever to have managed to be born into a comfortable middle class family.

How dare you put it down to luck?

Being conceived takes a lot of hard work and talent.

There's no incentive in this country for being born well.

IHT means you might as well be born to a tramp and a bag lady.

"So you have the ridiculous situation of a couple of decent combined salaries of £70,000 per annum being able to afford to buy only a small 2 bedroom flat in most towns and cities where there are good jobs, based on income multiplier for mortgages"

That's got nothing to do with taxation and everything to do with the housing market in parts of the UK.
A family on 70k a year living in an area of reasonable priced housing would have a very decent quality of life.

Nicole A family on 70k a year living in an area of reasonable priced housing would have a very decent quality of life.

Do you actually live in the real world?

Where is this sylvan paradise with cheap housing and well paid jobs?

I'd love to live there! Unfortunately most people's jobs dictate where they live, not the low cost of housing.

Inheriting in your 50s isn't going to change the kind of house you can afford while you're raising a family, tax or no tax.

I think it is not always as simple as it seems though, for example my OH runs a successful riding school in his late father's farm. The land is owned by his mother, however OH's income is generated by the riding school, it is a full time job (and some) and he owns a % of the business.

If (when) his mother passes away, the inheritance tax, based on the value of the land needed to run the buisiness would mean the riding school would effectively have to be sold.

This would not only leave him unemployed but also destroy a successful family business his mother built up from scratch 30 years ago. Of course someone wealthy enough to buy the business may come along and purchase it and keep it going but surely this becomes another way that the rich stay rich and the middles are unable to maintain success across generations.

I this way I do not think inheritance tax is fair to families passing down businesses or farms.

Fortunately, that's already been thought of.

There are exemptions to IHT for farms and businesses.

The solution here is simple. Let's actually build some houses so then people once again actually have somewhere they can afford to live. The price of houses can then drop well below the IHT threshold so all those people who have to pay the tax now will no longer have to. Imagine - people once again having secure affordable homes and lots of people no longer having to pay IHT. what's not to like?

What about the kids who are giving up jobs to look after parents? What happens if they are living in their houses? They could lose their parent, their role, their home

Thanks, I will take a look and show OH.

He is currently battling his way through the mother of all legacy headaches rolled over from his father so he may not have picked up on the full details of this.

And no-one's responded to my point about leaving money to provide for our disabled kids who arent able to work, so that the state doesn't have to. It seems cruel as well as stupid to take that money off them.

"The problem with that is that its inherently selfish to society, justified on the basis that you want to help your family. Yet everyone has to pay income tax to help people they don't know and most likely will never know, from their own labour.

So it gives certain families a benefit over other people, who may be more deserving or harder working. And that isn't fair, contributes to inequality and isn't good for society. Because it doesn't reward hard work sufficiently over luck of being born into a certain family."

That's only true if you decide that people need to be split up into little economic units of 1, and treated accordingly. If however you take the view that society is built on families because families are able, amongst themselves, to give each other support and stability and can even out the good times and bad, then you treat families as the economic (and social) units instead.

When you take that approach there is nothing wrong with the family member who is particularly successful financially helping others who, possibly through no fault of their own, are less so. In all cases the incentive to work comes from knowing that the fruits of your own labour will go to help your children, and maybe their children too.

Knowing that the state will view it as an opportunity to appropriate your money might then be seen as a disincentive to work - or more likely an excuse for complex tax planning!

Looking after our children is a very natural urge. I'm wary of anything that seeks to punish that drive and replace it instead with a requirement to support everyone else instead - particularly when you've already paid over vast sums in tax during your lifetime to do just that.

Everyone draws a line somewhere.

And no-one's responded to my point about leaving money to provide for our disabled kids who arent able to work, so that the state doesn't have to

I think there are some options for trusts in the case of disabled children who will never be able to earn their own money.