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.

It's entirely down to luck. It should be taxed.

that's the weakest argument I can think of!

Sounds about right to me.

The inheritance tax is not based on the increase in value of any property is it? What if you leave cash? Isn't that taxed as well?

Yes.

Money is taxed twice all the time though.
We pay tax then pay VAT on already taxed money. We pay tax to fund society really. It's money changing hands so it's taxed.

The way I see it, is an inheritance is basically free money. It's money you've not worked for and it's down to pure circumstance. You have no say in what family you were born, how much money they have etc. No one has any right to an inheritance and even if you have to pay lots of inheritance tax, thats still a lot of free money.

The argument "I wouldn't save anything if I didn't think it would go to my children" is bollocks, it's your money if you want to spend it all go ahead! That's no argument at all. You are more than entitled to spend all your money. my parents money is my parents money and I personally don't feel liked I'm owed any of it. Why should I?

Let's say the average couple has 2 children, theres 325k of money per person untaxed, just basically being gifted to someone. That's masses of money, absolutely masses of just free money that someone else has earnt.

" It's entirely down to luck. It should be taxed

that's the weakest argument I can think of! "

Luck is exactly the right basis for a tax. First, if you don't want taxes to distort behaviour and decisions as that causes inefficiency. So taxing labour income tends to reduce labour supply, sales tax tends to reduce consumption etc. The perfect tax is a windfall tax on luck. IHT is not a perfect windfall tax, it is more complicated than that, but it is closer than many alternatives. Secondly, taxing good luck will always be progressive (i.e., help redstribution).

The only better way to tax than taxing luck is to tax negative externalities such as pollution, congestion.

Tax is necessary. Some taxes are better than others. IHT as a pretty good one and there should be more of it. It is already the case that a couple can leave £1 million to their children tax free, if at least £350k of that is their main residence. That is a lot. And is not fair on those who don't receive an inheritance, through absolutely no fault of their own, and therefore have to pay higher taxes to make up for the tax not paid on quite substantial inheritances.

I have just benefited from an estate not that far below the £1 million threshold and it relly isn't right.

Sorry for all the typos. That was a bit complex for quick phone typing!

Nothing comes close to losing your parents but an inheritance will only help. And you are extremely lucky if you got one

I am helped by having received some money when my parents died? Have you heard yourself? I am lucky my parents worked hard and were able to fund their own care? Lucky they died before it was spent in it’s entirety? Let me tell you, absolutely nothing, nothing at all, makes up for the loss of my dear parents. What utter, inconsiderate dross. Please think what you said here when you lose your own parents. M

Perhaps all those brimming with excitement at paying their share of inheritance tax over to the government should just change their will to cut out their kids and make Boris Johnson and crew the sole beneficiary of their hard earned money?

I suspect there wouldn’t be too many takers in reality though (including most of the posters on this thread).

Tax is paid when money is transferred from one person to another person: employer to employee, customer to shop, rent to landlord, dividend to shareholder. IHT is paid on money transferred from dead person to inheritor. It doesn't make sense to say that money has been taxed before, of course it has - last time / every time it's been transferred between two parties.

I agree with it in principle. There isn't a special tax on gifts (as far as I know) but capital gains tax can arise on gifts of antiques etc.

If you want to exempt some transfers from tax, there are plenty of fairer ones to pick IMO.

You pay tax when you earn your money

Not all of it, and how do you expect services to be paid for?

You pay tax when you save your money

Only above a threshold so high it only applies to about 5% of savers

You pay tax on a lot of what you spend your money on

Many things are tax free, and again, the country needs the money

Then the money is taxed when you die

Again, only above a very generous threshold that means it only applies to a few percent with the most. And you'll be dead, so why do you care?

Changing inheritence tax to give recipients, not the estate the limit/allowance won't work, because people will just divide up their assets so all inheritees receive below whatever limit is set.

If that was to happen, it is likely that the tax burden would shift from the wealthy to the less wealthy, which is obviously unfair.

Hopefully we'll hand most of ours over to the dc 7 years before we die. If dh goes first I have every intention of ending my days in a small flat or bungalow, the capital value of which can fund my care. I hope my dc will laugh all the way to the bank.

I slightly feel we're all missing the point. We need to pay tax to pay for schools, hospitals etc. If it doesn't get raised via IHT ( which is relatively painless as it is on money the recipient has not yet received)it is going to be raised another way.

Knowing when you’re going to die seven years in advance is quite a trick. Giving your money away doesn’t work with care home fees, local authorities are all over that.

It's always interesting how many people are apparently going to spend everything then live in penury in their last few years to cock a snook at the taxman - yet no one ever has done this, it's always a nebulous future plan. It's like all the people who love to say how they should just give up their jobs and live on benefits because it would be so much easier - and yet they don't. It's almost like the reality is more complicated and less appealing than they claim?

EarlGreyOfTwinings
"It's entirely down to luck.
that's the weakest argument I can think of!"

Only there was a paragraph break between my example about luck.

And my assertion that "It should be taxed."

I have many more arguments why I think IHT is a broadly equitable. This was just one.

I was just tackling the 'oooh they worked so hard for it' nonsense as the gain has not been down to hard work but to luck.

These massive gains in property values in London and the South East distort the economy and lead to increased inequality.

why should the act of dying be a taxable event you weirdo
Many things are tax free, and again, the country needs the money to waste

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.

I don’t see the problem with this. Plenty more money into the economy. Why is this a threat?

DH and I are both from pretty average backgrounds. No IHT to pay for either of us. My parents are dead and I inherited a small sum. His are alive but will also leave a modest sum.

We work in a profession dominated by the upper middle classes. Although we are now both appalling middle class metropolitan elite types, we watch on with our enormous mortgage as our colleagues inherit enough money to pay off large mortgages on London properties, buy second homes and pay school fees. I imagine most pay IHT of course. It’s constantly apparent to us how inheritance preserves social inequality. Despite earning the same as our peers, our children will be materially and socially worse off. Have to say, a world without any inheritance allowed at all would be a very interesting one.

It's always interesting how many people are apparently going to spend everything then live in penury in their last few years to cock a snook at the taxman

I wouldn't call having assets of £325k 'living in penury'. It's a lot more than most people have.

My dad was brought up in a council house in the arse end of Glasgow. Neither mum or dad had silver spoons or inheritances (both supported their parents as they got old).

They worked their backsides off and brought up their family whilst running a business. Paid taxes, gave to charity, supported their parents.

They wanted their money to help their children and grandchildren. IHT should be for everyone or no one.

Given the relatively tiny number of people affected by IHT, it’s astonishing how many people get exercised about it.

It's always interesting how many people are apparently going to spend everything then live in penury in their last few years to cock a snook at the taxman - yet no one ever has done this,

Inheritance tax planning has gone on for years, and will continue to do so. I expect you just haven't seen the posts from people that have done this because they are dead.

I'm another that will go out of my way to make sure my children get what I have to give and anything I have left to may name when I die will fall well below the tax threshold. If I could keep it into old age should I need it, and have each of my children taxed individually on what they receive, I'd be happy to do it that way. I like paying tax and having the feeling that I have contributed to the resources that I and others use. But while IHT appears to me so fundamentally unfair, I'll do what has to be done to avoid it unfortunately.

Despite earning the same as our peers, our children will be materially and socially worse off. Have to say, a world without any inheritance allowed at all would be a very interesting one.

And you don’t want to pass all the money you make onto your kids, @Isitmybathtimeyet - even if it could really benefit them in later life?

As I said earlier - has anyone in favour of IHT cut their children out of their wills to leave all their money to the government instead? Nope - thought not.