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.

IHT is applied the same to everyone. You pay 40% on over £325k. If your estate was worth £1M, your inheritees would still get to keep nearly 60% of it. More than enough help for anyone.

Not if you don't particularly want to have to sell your childhood home.

It may apply to everyone but doesn't apply to everyone.

has anyone in favour of IHT cut their children out of their wills to leave all their money to the government instead

But you are not leaving all your money to the Government, just some of it above a generous threshold. Most people don't have enough money to pay it.

Penguin You are being ridiculous. Anyone from 'a council estate in the arse end of glasgow' would find even an unexpected £1k as untold riches, let alone a significant six figure sum. Taxing some of that money won't change that.

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?

I suspect my estate won’t be subject to IHT so I won’t be complaining about that at least.

Um. Interesting question. Of course I’ll do everything I can to support them while I’m alive, and they are and will be immensely more privileged than many others as a result. But if inheritance across the board were banned, then I don’t think I’d be too bothered. It’s not a particularly formed idea and it will never happen, but I’d quite like to write a novel on it. How might it work with restrictions on passing on wealth before death? Maybe it will become a blockbuster bestseller and then I will be immensely rich and have to consider IHT.

I would be very worried about the future of a child if I knew they would struggle to care for themselves for any reason. But of course millions of people are in that situation and have no way of helping their child while they are alive or dead. Maybe if we all paid more tax, we could offer better support to vulnerable members of society.

Many people don’t want to sell a childhood home but they have to, for even sadder reasons than inheriting money. Sometimes I read posts like that and I just see a teenager saying ‘but I don’t want to’. Life can be quite shit.

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

It's not a threat, it's a simple fact.
As an individual, I make 0 difference to the economy, none, zilt. I am aware of that! Now 90% of my clients are not UK based, so all the income I am generating and all the tax I pay on my own income and my business comes from foreign countries.

I am bringing money to this country - again, makes 0 difference at my tiny level. Add everybody doing the same though, we are starting to make a little difference.

If we can't work for our kids, and stop bothering, how is that going to benefit anyone?

More realistically, I start placing my income abroad to ensure I pay tax where it's fairer and my kids don't get penalised. Or at least I am careful where things go, because there's no reason why my kids should be punished.

Over taxing people has never generated anything for a country, it just makes people leave, or not bother at all.

Why? He wasn't a waif - 'untold riches' - he wasn't exactly sitting on a pile or rubies. They owned a nice house.

He paid his taxes, he had 3 jobs at one time, he employed people, he supported his and mums parents when they fell ill, he supported us through higher education. Why should the government get a cut of what he left behind?

a world without any inheritance allowed at all would be a very interesting one.

It wouldn't really be an incentive to work hard and earn much, would it.

If you have an estate worth £1 million, you’re still left with £720k after tax. How much more of a helping hand does anyone need?

earlgrey the poster I quoted said they would sell their house, quit their job and spend all their money. That’s quite different to what you’re suggesting.

What really needs scrubbing is IHT relief on farmland for non farmers. There should be a tractor test, if you can harvest the crop you can inherit the land.

Rollover money and IHT relief on farmland exacerbates mahoosive inequality.

Does anyone really think the wealthy pay it? Of course they don't. They gift it, trust fund it, buy farmland with it!

It wouldn't really be an incentive to work hard and earn much, would it.

Why on earth not? Most of us are earning money to live off right now, not for after we’re dead. Seriously, these sorts of exchanges on MN seem divorced from reality.

noonecan answer why the act of dying should make taxing gifts okay but if i just give a gift thats non taxable.

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?

Has anyone in favour of income tax ever let their children starve and just given all their salary to the government instead?

Has anyone is favour of capital gains tax ever sold their second property and just given all the profit to the government instead of keeping it?

What a fucking idiotic point. We're talking about a 500K inheritance actually being 450K instead - it's hardly leaving your children to the poor house.

CanILeavenowplease, I have lost both my parents. If you don't want to read my post properly that's up to you but don't ever come on here and tell me I'm taking dross when you can't be arsed to actually read.

A pre death gift of more than £3k is taxable if you die less than seven years after you’ve given it.

Isitmybathtimeyet

they're not, it's a fact. See the state of countries where people didn't have an incentive to work.

More realistically, what happens is what happens now already: the richer ones make sure their assets don't fall into the taxable basket to preserve them when they die.

it's only the little people who get conned. And get abused by those who have a bit less because the "rich" threshold is usually the amount one earns

Does anyone really think the wealthy pay it? Of course they don't. They gift it, trust fund it, buy farmland with it! if its a gift and then they die its taxed trust funds are taxed and buying land is also taxed

See the state of countries where people didn't have an incentive to work.

And my incentive to work, as with the majority of the people in this country, is to have enough money to house myself and my family, eat, clothe us all, and have some money for fun stuff in life. I honestly give zero thought to what I will leave behind me. It’s a very privileged position to not have an existential motivation to work.

Well if I died tomorrow my house is worth what I paid for it including the improvements and I’ve owned it for 8 years. There’s no profit. I have investment property that also hasn’t gone up significantly. So yes my estate would be paying tax on my money that has not had any capital gain. Not everyone buys low and then holds on to it until they die. Not everyone’s net worth is wrapped up in property - it could be a company or stocks. It all counts.
I inherited from my husband tax free. I think my kids should too.

just have a look at what happens to the estate from the Duke of Westminster... and see how much inheritance tax gets paid by the wealthy

The Royals have done one better, most of their properties "belong to the state".

Green loon - most wealthy people start gifting young. Investing in pensions for kids, uni fees, 20k on house deposit. If you have much sense about you there's really not much left by the time your in your dotage.

Re taxing land - if you have a windfall and a builder pays you a massive amount, say half a million for half an acre - if you buy roll it over into land you don't pay much.

Farmland is IHT free. You do not pay tax on it. You pay tax when you buy it, yes but a lot less the than IHT!

@Runmoreorless they wont pay tax on that £520k profit either if they are married and don't have much more in assets or cash. Married couples estates are accumulative for IT so if your Mum died before your Dad her IT allowance would sit with his, or vice versa, meaning the IT threshold basically sits at £1m from later this year for married couples estates if they leave the property to a child or grandchild.

You could of course argue that removing all inheritance would create a pretty powerful incentive to work in some quarters who currently are relying on the knowledge that they will be receiving substantial sums in the future.