Jeremy Corbyn wants to impose lifetime gift limits on children of £125,000

[ForTheLoveOfDoughnuts]

So we pay tax on what we earn. What we buy. And now this.. what's the point of working hard to help out our kids, for this to even be considered. Or AIBU?

And now when they need more money the only thing they can think of is to raise taxes even more yes and it is causing huge amounts of anger and upset.

Except Sweeden appears to have much higher standard of living than the UK?

Yes horrible system with its longer life expectancy, lower infant mortality, better health care, higher social mobility and lower ineqaulity.

Just awful.

Yes healthcare is excellent but you pay for it, a small amount per year

Which i think should happen here, personally

The £12k my dads giving me for my wedding

There is currently an exemption that allows you to give up to £5000 to a child on marriage with no IHT implications, so tax law already makes exceptions for specific situations. Not clear whether this would apply with this tax, but if it were implemented the government would have to address how it affected current rules.

However, I think the big stumbling block with this tax is that the onus would be on you to keep a record of all these gifts throughout your lifetime. At the moment IHT only goes back 7 years. Imagine trying to work out how much your parents spent on your wedding 40 years ago and whether the expenditure was out of income? How would HMRC check?

Good, let's tax benefits then. People haven't earned or worked for thise either.

Most benefits are taxed actually:
www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

It might be worth educating yourself before making silly statements. It’s embarrassing.

Corbyn is not perfect, he’s not the messiah but he is by far the best chance we have of coming out of this current disaster (entirely of the tories making) in one piece.

Haha! I take it you missed the local election results last month then?

www.mirror.co.uk/news/politics/local-elections-corbyn-very-sorry-14987921

Given the mess the Tories are in, Labour should be storming local elections and be well ahead in the polls - but they’re neither of those things. To suggest anything else is just completely deluded I’m afraid.

Oh, but Universal Credit isn’t liable for income tax... is that Corbyn’s fault too?

To suggest anything else is just completely deluded I’m afraid

Sure, I’m the deluded one. People have such short memories.

People who receive benefits also pay tax. They just don’t pay income tax on some benefits because it’s a bit pointless to give somebody money on the basis of need and then take it back.

They haven't earned it, why not tax it?

However, I think the big stumbling block with this tax is that the onus would be on you to keep a record of all these gifts throughout your lifetime

The Foundation Resolution, which proposed this idea (not Corbyn or Monbiot), suggests that data would be collected via annual tax returns, as is the case in Ireland. Also, it wouldn’t be retrospective, so no need to try and dig out ancient paperwork.

Unless your parents are in a position to give you another £114k or more while they’re still alive, it wouldn’t affect you would it?

I haven't rtft but the proposal is for a tax on any individual who receives more than £125k in their lifetime. So (in the case of parental gifts to DC), it's the sum of all gifts given during the parents' lifetime plus anything bequeathed on death. After the sum hits £125k, the remainder is taxed at the appropriate income tax rate.

And watch taper relief if you're concerned about the current rules and reliefs. I've just listened an explanation of IHT from a money programme which was linked to in a paper after this proposal was publicised and the financial adviser being interviewed gave the very clear impression that all gifts would qualify for this relief if given away less than seven years before death - very misleading.

Ferret27 - what tax form are your required to fill out if you give out gifts worth more than £3000 in total in a year? If you give to charity and gift aid your donations, you can declare this and lower your tax bill (or not bother to declare it if you are a taxpayer but don't want to lower your tax bill - I'm not aware of that being illegal...), but where are you required to declare other types of cash gift made during your lifetime? So far as I'm aware, those gifts get declared by the executors of your will on an IHT form (which it would be helpful if you had been filling it out as you went along, but not sending off to HMRC every year) - ie after you die.

After the sum hits £125k, the remainder is taxed at the appropriate income tax rate.

Not necessarily - there are different scenarios with different rates suggested, eg:

£125k flat rate 10% no spousal allowance

£500k flat rate 40%

£125-£500k at 20% and >£500k at 30%

£125-500k at 20% and £500-£1.5million at 40% and >1.5million at 45%

All just suggestions.

People need to read the discussion paper.

Ok then, appropriate -income tax- rate if you prefer ContinuityError. The amount will be taxed as income so I think my words were actually correct and I put in the caveat about appropriate which is also correct. The point I was making was to counter the implication that it was to do with the parents' lifetime, which it isn't.

Or rather, appropriate incometax rate!

And gifts still form part of your estate until 7 years have passed. If you give away more than the IHT threshold of £325k for the individual or, effectively, £650k if a married couple, then you start getting taper relief on the excess. If you give away less than the threshold amount, there is no relief, the full amount remains part of your estate. SinkGirl - If you are wealthy enough to be giving your children colossal gifts donkeys years before you expect to die, I don't view that as tax avoidance - it's benefiting your children when they will benefit the most from your help, rather than obscurely telling them you have more money than you know what to do with, but they have to wait until you die before they can have it,meven though you aren't spending it and don't need it. It's not tax avoidance if there is no tax. If these proposals were made, it would no doubt create all sorts of new tax avoidance wheezes for the exceptionally wealthy, but as it stands at the moment, it's a stretch to say that giving your money away is tax avoidance because if you had kept it for the next 50 years, someone would have been able to tax you on it.

@zipee Swedes standard of living is OK if you’re already well off. But the system is falling apart. For example, in some areas the waiting list for a dentist appointment is several years ( yes, you heard that right). Forty-eight per cent of immigrants of working age don't work, almost one fifth of Sweden’s population living in poverty are elderly persons. The welfare system is not coping with the huge increase in expenses. Over 40 councils are in crisis facing hundreds of millions in social welfare bills which they have no means of paying.

Sweden abolished inheritance tax and gift tax in 2004/2005;

iea.org.uk/blog/how-high-tax-sweden-abolished-its-disastrous-inheritance-tax

Inheritance tax in Norway was abolished in 2014;

www.skatteetaten.no/en/person/taxes/get-the-taxes-right/gift-and-inheritance/inheritance-tax-is-abolished/

The situation where you give away eg £325k to your DC hoping you'll live seven years but only last six and then leave the DC the family home worth eg £500k in your will thinking it will qualify for the full main residence relief is the very common situation I'm thinking about Walkaround. Taper relief is often very poorly explained.

goodbyestranger

The amount will be taxed as income so I think my words were actually correct

This is not a proposed tax on earned income but on gifts and inheritances (which are not earned). The suggested rates are variable and do not necessarily bear any resemblance to income tax rates.

Yes I resent the idea that gifts given away years before death is avoidance too. The fact is that seven years is a good enough length of time to be sure that this is a real gift, no strings - rather than a gift in anticipation of death/ IHT. If a person goes missing then seven years is the time at which they can legally be presumed dead.

Ok ContinuityError that's fine.