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’ve seen the kind of care my local authority provides. I was very glad my parents had the means to dodge it.

In our area the care homes are for everybody. If you have the money you pay, if you don’t then ss will pay the bill which is normally lower than those that pay privately.

I’ve seen the kind of care my local authority provides. I was very glad my parents had the means to dodge it.

Is there a big difference between care provided by the state and that which is provided privately then? Probably a stupid question but I’m not especially knowledgeable on this front...

IHT only raises £5.3bn per year. Raising income tax from 20% to 21% would raise a similar amount. You have to decide for yourself if increasing taxes for everyone who earns over £12.5k is "fairer" than taxing estates worth over £650k (or £950k if leaving a property to a family member). One way to regard IHT is to think of it as a deferred wealth tax that is not payable until you die.
All this "worked hard all their lives and paid all their taxes" is not quite right. They may have paid all the taxes they were obliged to pay, but it is more accurate to say "worked hard all their lives and didn't pay enough taxes". In the year to March 2019 the national debt reached £1800bn and it costs £43bn per year in interest. On average, each person who dies in old age should have paid about £30,000 more taxes over their lifetime.
My personal opinion is that there should be no IHT between spouses, and otherwise IHT thresholds should be lowered to around £50k with an exemption for a single property left to a family member.

Not all money to be inherited is from property and as you really can’t differentiate there’s no fair way to impose that tax.
Inheritance tax isn’t fair
I work and save for my son, I’ve ensured that I have a house for him. If I died tomorrow the house would have to be sold to pay inheritance tax.
Why can’t I pass it in to him?

If the state provides your care you have no choice in where you go and the determinant of that will be cost. My local authority pays so little no halfway decent home will accept its clients, there’s no question of self funders subsidising state funded people here. There aren’t enough places and the good homes can fill them all with self funders.

Yes. Extra fees fund better service and quality. Not always of course but no one should give assets away and rely on the state. However you do want DC to have something so many people plan to reduce IHT on their estate.

Contrary to it not being socially mobile, inheriting has taken many people out of renting and can promote spending and saving. We need both of these for s bouysnt economy. If everyone relies on the state, and younger people to pay for them via their tax, we are in serious trouble above the ageing time bomb we are already looking at. It’s cheaper to get people to pay for themselves rather than the state.

I’m sure Labour will find that people find all sorts of ways to avoid this. We would doen size. Use trusts if they remain legal and carry on giving it away!

A £500,000 estate would pay £70,000 IHT. It is £500,000 - £325,000 x 4/10.

I work and save for my son, I’ve ensured that I have a house for him. If I died tomorrow the house would have to be sold to pay inheritance tax. Why can’t I pass it in to him?

You should absolutely be able to pass it to your son, but a lot of people on this thread don’t believe that to be the case.

@tomboytown, if it’s worth more than £500k, he’ll have to sell it and buy another with the £430k he’s got left. Still not a bad position, is it?

I wouldn't complain.

Yes, that’ll be nice for him, losing both parents and having to move out of his home. I would like to think he could have some stability, staying in his own home

If you’re talking two people’s estates, that’s £1m, is your house worth more than £1m?

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

No, I had no idea! Not exactly publicised. But I’m on PAYE so my dealings with the world of tax allowances etc is relatively limited. I can see the issue with that being that government spending couldn’t be predicated on voluntary donations, so people with money they want to contribute to the wider good are more likely to give that to charity (and thereby attract tax relief of course, ironically)) which is a system built to accommodate unpredictable income. The amount I could afford to give would be entirely meaningless in public spending terms. It would probably pay for some stationery.

If there was a scheme in which people were offered a voluntary higher tax rate (is that this? Or is it a one off payment through self assessment?) and therefore funding of whatever amount was raised could be assured enough to be spent meaningfully, I would sign up.

if it’s worth more than £500k, he’ll have to sell it and buy another with the £430k he’s got left. Still not a bad position, is it

Or he could take out a £70k mortgage on his £500k house to pay the IHT. If he doesn't have the income to pay a £70k mortgage, you could take out life insurance to cover it. No need to sell the house.

Just send. Cheque to HMRC:

www.theguardian.com/politics/2017/oct/01/you-can-pay-more-tax-if-you-want-to

He can’t take a mortgage out if he’s 15!!
I’m only concerned about him being turfed out if the house while he’s young! Once he’s 18, I can change the house to joint names

I do have life insurance to cover it.
But I’m just playing devils advocate.
I think you should be able to pass on your house

Well you’re going to so no problem.

Interesting to see I could specify how the money would be spent! Still sadly far too little at my disposal to make it worth my while, but I will seriously consider including that as a legacy in my will.

Sorry I fundamentally disagree - my parents worked all their lives, were frugal, paid off their house, never claimed a benefit in their life, gave to charity and now they should be taxed on their hard work and sensible money management - to re distribute wealth to people who did not plan aswell.
You're spot on. It's redistributed wealth given to people who have done nothing to earn it. That also includes beneficiaries of the estate, including children!
It's not as simplistic a source expecting everyone to plan financially for their whole lives. I work with special needs children. Some of them will never be financially independent, never hold down a job, never live independently. Who the hell is supposed to fund their life? They're stuffed if their parents haven't got enough money to pass in to them.

I think inheritance tax is unfair for the normal person who has done well for themselves, built something up of a nice amount, only for it to be taxed heavily once they die.

I've had to deal with a decent sized estate, and the stress, sadness and anger over inheritance tax was awful. It felt like every element of the estate had to be accounted for, there was a deadline to pay the bill, which added pressure to us as the executors, knowing if we didn't release enough money by the deadline, we would have to set up a payment plan to deal with what was owed.

I agree some form of tax is fair, but when someone is single and therefore the threshold is anything over £325k is taxable...it does not feel very fair. It honestly felt like our loved one was being ransacked for all they had worked for.

The really rich will protect their money in trusts etc, they will have lawyers working on protecting their assets. The normal person does not, it doesn’t feel like a fair system.

You're spot on. It's redistributed wealth given to people who have done nothing to earn it. That also includes beneficiaries of the estate, including children! nope dosnt matter who the benificiries are it still gets paid and whats wrong with helping children?

For those arguing that inheritance tax puts them off earning and saving, presumably you think that all childless people are on the dole then?
Obviously not - people earn for themselves primarily. No one earns more just because they have children. Probably the opposite in most cases. Plus you can be pretty well off and spend it all on care within a few years.
It would be nice if parents of disabled children didn't need to worry because the state would care for them.

mummy2oneandtwo, I felt like that when my mum died and I had to clear the family home within the month. When renting and someone dies, you have a month to clear out their things or you are liable for their next month's rent, council tax etc. After mum's funeral I immediately had to clear everything out. It was awful.

For those arguing that inheritance tax puts them off earning and saving, presumably you think that all childless people are on the dole then?
Obviously not - people earn for themselves primarily. ou know something i should be allowed to spend money the way i like and i shouldnt be taxed just because i want to give a gift because ive died i pay inheritance when i wouldt if i hadnt