To want to scream when people talk about inheritance tax taxing income twice?

[Runmoreorless]

You see it here and elsewhere often, people complaining that (usually) the parent has paid tax on their income why should it be taxed again when they die?

BUT the vast majority of what people leave, over the IHT threshold comes from capital gains, usually on property, which has never been taxed.

There may be other arguments against IHT but this one makes no sense.

I agree OP, and at its most basic level, an inheritance is an 'income' so why shouldn't it be taxed?

I never understand this. Selfish people. If you inherit enough to care about, you're lucky and you ought to want to give a bit back.

Good point about it being exempt capital gains. There should be some sort of tax on property gains. Maybe instead of exempting main residences from CGT, the gains should just be rolled over and taxed on death.

On plusnumbers point, I think it would be fairer if it was a tax in the hands of beneficiary. It seems unfair that if you have siblings who have already been given money and are given £100,000, you are potentially charged 40% tax on that. Whereas an only child might get £300,000 and pay nothing.

Money is generally taxed when it changes hands - through sales tax (Vat) on purchases, income tax on earnings, etc. Inheritance is money changing hands so it should be taxed. I think the inheritance tax threshold is too high and I say that as someone who is likely to benefit from a large inheritance.

I agree with everything said so far!

Inheritance is a massive source of inequality.

You don't pay twice.
You're dead.
The children who inherit it pay - they didn't earn it and didn't pay tax on it.

@SarahAndQuack I've just paid £175k of inheritance tax. I don't feel particularly lucky, it is what it is.

I'd rather have both my parents still here that's for sure .

I can't help that my parents were wealthy. I've ensured the payment has been made. I've not moaned or complained about it.

For me, it's just another step on the road to probate

Totally agree. Usually the people moaning about it have benefitted from huge increases in property prices which they have not “earned”. I’ve never understood why it’s deemed fair that most people pay a higher rate of tax on money they earn through hard work, than on money that is just given to them.

You pay tax when you earn your money
You pay tax when you save your money
You pay tax on a lot of what you spend your money on
Then the money is taxed when you die?

I have no idea what my parents' estate will be worth, but only that DF keeps hinting that there will be a lot of tax to pay, and which worries him a lot.

I just think if DSis and I are going to come into that kinf of cash, then we we should pay some tax on it.

I agree about inheritance being a massive cause of inequality. Even if your parents have "only" a modest house to leave that's a huge amount of money to have land in your lap, unless there are a lot of siblings to share it, it should be taxed.

I really don't understand the foaming at the mouth over inheritance tax. To me it seems the fairest tax there is. You are taxing the dead, they have no use for the money. I agree with pp who says the threshold is to high and also speak as someone who will benefit from this.

But most of what you leave when you die isn't the money you paid tax on Lord, it's money you "earned" through property ownership and no tax has ever been paid on it.

Children (or beneficiaries) don't pay inheritance tax. The dead person pays the tax, and then whatever is left over after the tax man has had his cut is then given to beneficiaries.

If each individual paid inheritance tax based on the amount they received, then I would agree that it is a fair tax. But that's not how it works, tax is due on everything that is left, no matter how many people it is then split between. So, I think it's reasonable for people to complain that they are going be taxed upon death when they have already paid they tax they owed in life.

Maybe inheritance should just be treated as income as taxed as such, so it's not the dead person's estate that pays it but the recipients as though they'd earned it.

The estate pays the tax, not the recipient.

It's not just money from a house Even if it was, do you think the deceased got the house free or did they pay for it with taxed income? Some weird ideas about money on this thread!

Yes, I would agree that it might be fairer if each inheritance was taxed rather than the estate but disagree that they've paid all the tax due in life. Obviously they have within the law but they've (often) made a massive capital gain on which no tax has been paid.

Df should see a solicitor and make a will to protect what he can against tax. You are right, it is ethical to pay what is due. It won't be more than you can afford if estate is worth a lot. It might all go in care home fees.

alpaca, I am not saying you are lucky that your parents are dead, and I'm sorry for your loss.

But, you do realise that many people who don't inherit from their parents also feel bereaved, right?

I was devastated when my grandfather (who was the real 'father' in my life) died. But I also recognised he'd made me very lucky in financial terms, and I didn't and don't feel bad about taxes on that. And they were a darn sight less than the figure you mention.

Paying your taxes doesn't cheapen the memory of the person who left you money. It is just a way of giving something back.

My parents paid about £20k for a house that's now worth c. £550k. Yes they paid for it out taxed income but they haven't paid any tax on the £520k profit

Chic you can be sure that it's worth more now than they paid, so that's a capital gain

My parent's paid less than 5k for their house, it's now worth £1m. They did nothing to 'earn' that money. When the time comes I shall be happy to pay tax on it (hopefully not for many years) As I have done nothing to earn it.
Same with MiL and FiL homes (similar value)

I don't particularly view it as 'giving back' right now.

I have ensured the IT had been paid. Of course no choice in this - it's to be paid prior to probate. I also work myself so trust me, I don't feel amazing right now at the money I've inherited.

But anyway. I don't moan or complain although no one likes paying a load of bloody tax do they? It's almost a moot point. It's charged, it's paid. Meh

I do think inheritance tax can be ridiculous - why should money gifted to someone be taxed differently from money inherited. It's especially ridiculous in the case of two sisters sharing a house when one dies for example. Originally the level of inheritance tax was set incredibly high so only the super rich would be affected. Now, due to inflation it affects most families who own properties.

That said I don't really resent the inheritance tax I'll pay when my mother passes away. I think it helps wealth redistribution and in my case I haven't done anything to earn that money anyway.

Well basically tax is paid twice on the same thing.

How can this one not be unfair.

Inheritance is a massive source of inequality. that's such a lazy way of seeing things. Let's be honest, if children couldn't inherit, most people wouldn't bother trying - I'd quit my job, would sell my house and spend it all whist I am alive.

Let's not forget that the really wealthy put all their assets in trusts, and are not bothered by inheritance tax. Before begrudging someone for leaving a few quid, or the house they spend their life paying for, have a look at the inheritance of the last Duke of Westminster.