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.

And I really resent it when people say the rich don’t pay tax. My husband was a high earner and paid his 50% right off the top. There aren’t the loopholes people seem to think there are. Off shore companies maybe but you are talking mega rich, and I think it’s companies that need their tax obligations investigated.

I do think it would be fairer if the person receiving the money, rather than the person dying, paid the tax. It would make tax planning harder, unless you were prepared to share out your wealth, it would encourage splitting money between adult dcs plus dgc to reduce the tax bill, perhaps even make giving to charity seem more worthwhile.

But I do think it does encourage people to dispose of assets earlier, as it'll only be taxed anyway, I do know people who signed houses over to children to avoid IT, assuming the house would be suitable for them until death, then found themselves stuck unable to move to a more suitable flat/bungalow.

@Pipandmum as long as your property goes to your kids or grandkids you can leave up to 1mil tax free from later this year. Your late husband's allowance is included in your estate (as long as you don't remarry and none of his personal estate paid IhT already)

The problem is lots of people saved and were careful with their money then it still gets taxed. People work hard, get taxed, save, get taxed, die, get taxed. It puts people off saving as you mat as well spend it.

The reason it is unpopular with most people (apart from Mumsnet) is because it penalises carefulness, prudence and responsibility for providing for yourself in retirement.

We rely on a decent chunk of society buying their own homes, paying off their mortgage before they retire, saving a nest egg, paying into a pension, so they don't cost the state too much in retirement. If nobody did this as a society we would be screwed as literally there would not be enough money to provide for all the old people who would need housing and income to support them.

If inheritance tax (or the Corbyn alternative suggestion) becomes too punitive, no one really has an incentive to do this anymore, you might as well just think, fuck it, the state will provide for me when I'm old and take anything I leave, so I'll enjoy my money now on holidays, cars and nice stuff.

Although I appreciate that there are a small percentage of people who are in the IHT bracket because they're from old money and never earnt it themselves the majority are paying IHT because they have saved and done all the right things, and governments need to reward people for doing this rather than penalise them, otherwise everyone is screwed.

I’d like to pay more tax, and would not baulk at IHT if I qualified. I am a higher rate tax payer but not rich enough not to need public services. I would love to pay a chunk more tax and perhaps see our public sector actually able to cope.

Obviously those who favour a small state will never ever agree with this, but plenty of people who want to see higher taxation are perfectly happy to pay it.

All these people saying 'I should just spend it then so I don't need to worry about paying inheritance tax', go ahead and spend it then. See what it's like renting all your life. I'm from a council estate in the arse end of Glasgow, as someone so eloquently put it further up thread. My parents rented all their lives. And these days council houses are impossible to come by. People rent as they can't afford to buy, not because they aren't good at planning or pissing it up the wall. They are usually pretty skint.
What I'm trying to say is that if you want to sell your house and live in a council scheme or in private rented accommodation just so you can avoid inheritance tax then go ahead. But I don't think many if you will.

*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!* do you pay as little tax as possible of course you do like everyone else do you do youre best to support youre children yes. like everyone else

This thread has revealed, if nothing else, how ignorant people are about IHT. We consider ourselves pretty well off but our estate will be less than £1 million between us so no IHT liability. If we were over that limit, I’d think our four kids were pretty spoilt if they complained about getting a quarter of a million windfall.

It's a tax that has to be paid. And I do see it as helping out our society but it has caused me frustration that a relative who died before pension age and paid for their own care home fees in excess of 100k and then a massive chunk of their estate is taken by the government just because they were careful in life and worked so hard it contributed towards their death.

So if that makes me greedy and selfish so be it.

isitmybathtimeyet you know you can voluntarily pay more tax if you want to?

Though apparently only 200 have since the year 2000 so statistically you're very unlikely to be one of them.

I was really cross when we had to pay inheritance tax because I was grieving a lot and desperately wanting my mum back. She had only been in her house for a few years so hadn’t made a fortune from buying a house for a fraction on what it was worth when she died.

She worked bloody hard all her life, paid higher rate income tax, worked for a charity, donated to charities, made sure she didn’t have any debts, never claimed benefits etc etc. Then we had to pay 40% as her house was worth more than the threshold.

What made me cross really was that somebody mega rich died at the same time and his children didn’t pay anything as all their mansions, shares etc are in trust so simply passed on without any liabilities. The
One at the top love the life of riley and the rest of us argue about these tiny amounts that to them are a drop in the ocean.

Yes, it is nice to give back and help others but it has to be equal...

ssd
you can sell a house and simply downsize. There are ways to say goodbye to the family home, and possibly the house you bought for your pension, and live in much smaller accommodation.

Anyone with a bit of assets plans and arrange for their children not to be penalised and lose out too much.

Kahlua4me

my very point exactly.

Let's start with the royal family, shall we? And they are far from being the only ones, but they are not a private family, are they.

Can we please stop saying people that owned their own hones worked so hard and were careful in life. Like if you didn't own property you didn't work hard or were careful. That attitude frankly stinks. Even more so now when getting on the property ladder is almost impossible without an inheritance or cash lump sum from somewhere.
It is possible to live carefully and frugally and never own property. I know that's an impossible thought for a lot of you living a blinkered life but it's true.

I know Earl, but what I'm reading here isn't about downsizing, its let's spend all our money living it up so I don't need to pay inheritance tax or paying care home fees.

Quite honestly anyone spending their money to avoid care home fees is an idiot or masochist. The kind of care the state seems fit for those with no choice is horrendous.

All these people saying 'I should just spend it then so I don't need to worry about paying inheritance tax', go ahead and spend it then. See what it's like renting all your life.

Most of us will have rented at some point so it really wouldn't be the shock you think it is. And it I don't possible to avoid inheritance tax while still living in an owned property, the owned property just has to be small enough that it comes under the threshold.

But the point you seem to be trying to make, that renting isn't the ideal for most people long term, is exactly why people in my position will do what they can to help prevent their children being in that situation. If they're gifted tha money in smaller amounts sooner rather than later, they benefit rather than the tax man, and they spend fewer years renting or struggling with a mortgage.

People rent as they can't afford to buy, not because they aren't good at planning or pissing it up the wall. They are usually pretty skint.

This may be the case for some but don't assume all people that rent couldn't afford to buy. The people I know who rent live in places they could never afford to buy (eg Victorian terraces in nice parts of London) but they definitely could afford to buy something, they just don't want to compromise and buy somewhere they don't want live to get on the housing ladder.

I sometimes wonder if they're the smart ones though with the way things are going - they buy nicer cars and have nicer holidays than us as they haven't scrimped for years to get a deposit on a house like we did. They can move at the drop of a hat to get closer to the school catchments, and have no bills to pay for when things go wrong in the house.

I guess the taxpayer will have to pay for their housing needs in their retirement and they won't have any assets to pay towards their care if they need it.

So maybe I'm the mug for foolishly making all these compromises to ensure I have paid my mortgage off by the time I retire.

And unavoidable for many, my mum included.

Quite honestly anyone spending their money to avoid care home fees is an idiot or masochist. The kind of care the state seems fit for those with no choice is horrendous.

Absolutely not always the case. Both grandparents in state funded care homes as they had no assets, we're both lovely and I would be more than happy to be in either one day myself.

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.

Anyone who has to swear to get their point across is clearly a moron and not worth engaging with. But like I say - those in favour of IHT are very welcome to leave a portion (or all) or their wealth to the government upon their death. I would like to know if anyone on this thread in favour of IHT is planning to do just that?

How do they mange to move at the drop of a hat givemesteel? Are you sure of that, seems a pretty cushy lifestyle they have, why don't you try it instead of being so sensible??

It is possible to live carefully and frugally and never own property. I know that's an impossible thought for a lot of you living a blinkered life but it's true.

This. It’s shocking how many posters on Mumsnet seem to think otherwise.

The kind of care the state seems fit for those with no choice is horrendous.

And yet it's often the exact same standard of care in the exact same environment that is received by people paying privately. Self funding people subsidise the care of those who can't pay in many homes.