To think post covid19 would be a good time to completely overhaul inheritance tax?

[DogsDinner]

I know a couple of only children who are likely to inherit the best part of £750,000. Other families where the kids will inherit hundreds of thousands each.

Not a penny tax will be paid on this money.

I also have friends who will inherit nothing, indeed will probably have to scrape together the money to pay for their parents’ funerals, and in turn are unlikely to be able to leave much to their children.

AIBU to think that people who have probably already had a very good start in life, should not then go on to be further advantaged by inheriting such staggering sums tax free?

I’m not a socialist, and I do think parents should be able to leave their children something, but surely it should at least be taxed?

It honestly seems to me to be the obvious place to start raising money as we try to repair the damage to the economy.

If you are defining ‘wealthy’ as those who may be over the IHT threshold, then what you’ve said is not true, and it’s not just dependent on property prices. I think you should read a bit more widely.

I just can’t understand how anyone can argue it is right or fair

It might not be fair that in life some people will inherit and some not, but that doesn’t make it ‘not right’.

The only way to make it fair and right, in your terms, would be that all property is owned by the state, rented at a set level, and reverts to the state in death. Communism!

Because what is fair about one family having a council tax on a fair, protected rent all their life and then getting care home fees paid by the state, while another family scrape to buy, coping with fluctuating interest rates, negative equity etc, then sell to pay care home fees and then pay a load of tax to the government!

Plainsailing,

That’s interesting, and I can see from this thread the prospect of inheritance tax does provoke a very strong negative reaction in lots of people!

@DoubleTweenQueen Lol! You must be a troll.

@plainsailing of course I don't believe I shouldn't have to pay more to earn more. I'm happy to help those less fortunate and understand the many varied reasons why some people need government help.

I just don't think that my parents, having had to steal as children because they were so poor, should have to have masses of what they've saved for me so that I can 'move up
In the world' re-taxed.

Especially where houses where I live coat so bloody much (1.2m for a 3-4 bed) that the scaling doesn't make sense.

I agree. I will inherit a small amount but think we should be taxed in the free money we receive.

There should be a caveat for disabled offspring so maybe (idk how much) a set amount they can receive on top for care etc.

It should be more difficult to avoid at the top end too 're trusts etc as the rich (e.g. the Grosvenor estate) control so much of the county's wealth.

Just because your parents were lucky enough to see success from their hard work (as opposed to people who worked hard but the cards did not fall in their favour) doesn't mean you deserve it more than a poorer family.

YinMn,

Not at all, in fact I completely disagree with the principles of communism.

I agree life is inherently unfair, and can never be made fair. People who have to pay tax on their inheritance will still be massively advantaged over people who never inherit money.

@CorianderLord I understand how you feel. But that's exactly how Philip Green's children feel as well.. or Lakshmi Mittal's etc. No child feels like their parent's hard work should be taxed when it's handed down to them. The reality though is that we are extremely privileged to get £1M+ "handed down" to us at a time when there are, literally, millions who work a lot harder that we do but won't ever get that opportunity.

We can't clap for NHS nurses and then turn around and ask the government for a tax free inheritance of £1M when those very same nurses are being deprived of pay rises, equipment etc. because the government cannot raise enough money in taxes.

My parents own their home that they worked hard for and plan to leave to myself and brother neither of Us who actually own our own homes so what they leave would be just enough for us to maybe get a small 2 bed property each . They have worked hard to buy there house and want is to have something out of it eventually as they aren't in a position to give us money now . They sold there more expensive house to buy a cheaper one so they could fund their retirement as neither had job with private pension . They paid tax on there earnings , stamp duty downsizing etc yet people think they shouldn't be able to leave it to us as we haven't worked for it , we work we just cant get on housing ladder . Actually I hope that by time anything happens we will be old too so won't matter so much and would give the money to my kids to set them up . Anyone would help there kids if they can .

The change I would make on inheritance is a change to the rules about inheriting pension money - this is completely tax free if the person who dies is aged under 75. there seems no reason for this - the money was not available tax free for the person who earned it- they pay tax on 75% of it but it is 100% tax free for the person who inherits it? this tax free amount is on top of the inheritance tax allowances. Pension money has been earnt but not taxed so it would be sensible if 75% of it was taxed.

75% taxed at 20% I mean!

Also if every person was going to be taxed for smallish inheritance etc why would people not just sell up after retirement and spend the money after all if the government are going g to tax 40% off it . Yes some have benefited from house prices going up but they have to maintain that house to keep it up in the bracket and Lao will pay a higher council tax etc . Maybe a million is too much but in this day and age £20000 doesn't go as far as many think

@Binkybix Why is IHT your target, and what would you change it too? How much would it raise, and what proportion of the population would it affect? IHT does exist. The level is set. Would you abolish inheritance completely?

I think IHT is something to look at based on the assumption we need to raise some money. Money/assets that someone has done absolutely nothing to earn seems like a sensible place to look at alongside others. To me it seems fairer that someone receiving a huge windfall for nothing should share a decent chunk of the burden.

On the numbers - you don’t set a policy like that by plucking numbers out of the air so I won’t give absolutes here as I’ve not done that research. I would also ask you why you think the current limits are correct. What have you taken into account in reaching that conclusion.

But to have a go at your questions (and I hope you’d give the same courtesy), no I would not ban inheritance.

I would want to think more about an idea that looks at each person having their allowance for gifts/inheritance. Tax free/v low tax below that, higher tax above. And I’m relaxed about that being in the hundreds of thousands.

In terms of total amount that would depend on what a government decided they need - you look at the range of options from that and try to model what you think you would get (not an exact science obviously), alongside other options.

I just tend towards rewarding activity than just luck (of who your parents are) but I do recognise the need for balance.

Rushed answer so sorry for typos, omissions. Feeding kids

Sorry - would add that about 2-300k life limit per person would feel about to me, but as I say not looked at data so would be easily persuaded on that. I plump for that sort of region because it feels like that is enough to give yours kids a cushion (a natural human instinct) but not enough to totally skew society.

Thanks @ReginaBambina and @Binkybix for the explanations. All those years studying to become a chartered accountant and over 30 years working as one were clearly a waste of my time. Now you have explained taxes to me on this forum it is so much clearer.

Erm no. I still hold my opinion that earned income should be taxed once, ignoring indirect taxation such as VAT. Yes I agree the multitude of taxes give the govt the benefit of layering them so that people don't realise the huge value of their income that really goes in taxes. But this is where we are.

You earn your money, you pay your taxes. My personal opinion, is that if you save your money in any form, then you ought to be able to pass those assets to your beneficiaries without IHT. Often assets have to be sold because there is not enough cash to pay the IHT, when the moral thing to do is let families pass their assets down to their children.

I don't have any wealthy parents or relatives to pass things down to me, before anyone starts thinking that my opinion is based on personal greed.

Always very easy to spend other people's money.

Do posters think that other gifts should be taxed as well? Because I see that many people seem to be against money / assets that the recipient has done nothing to earn. This seems to be a matter of principle for many of you.

For example, many parents give £20k + for their child’s wedding or even £50k or £100 k for a house deposit. Surely this is completely unearned too?

Why should it be ok to give money to your children when you are alive but not when you are dead ?

@Marriedtoapenguin Yes, that’s how a part of me feels like when the £70k I pay in tax each year is spent on propping up some else’s cash flow poor business from failing. And then I realise that society is a lot bigger than just me and that I’d rather pay my share to live in a society that works for everyone.

My parents are comfortably off through hard work and being sensible with money. My siblings and I have benefitted from this in many ways including a good education, help with university costs and help getting on the property ladder. Thanks to all the support we've been lucky to have we are doing just fine. None of us need^^ the money that we will inherit (if it's not all used up for care) and we haven't earned it, we've done nothing to deserve it. I'd happily pay more tax on it if it helped reduce social inequality.

There is certainly inheritance tax at 40% AFAIK over a certain level.

As for house price gains, there is tax on any gain in property value - once it’s sold - other than for your main residence. I can’t think it would be right or fair to tax gains on anyone’s sole residence while it is their sold residence. What are they supposed to do if they need to move?

Stamp duty on house purchases is pretty hefty anyway for so many, and more if it’s not your only property. The value of a sole residence is taxed anyway after death, if the total estate exceeds the threshold.

Of course it’s unfair that some people inherit a lot, and others much less or nothing, but that’s always been the same and is never going to change unless we have a totalitarian state, and even in those it’s pretty common knowledge that those at the top will look after themselves very nicely, thank you.

Thanks @ReginaBambina and @Binkybix for the explanations. All those years studying to become a chartered accountant and over 30 years working as one were clearly a waste of my time. Now you have explained taxes to me on this forum it is so much clearer

No need to be so snarky about it. Many people said taxing money more than once isn’t fair. It was a fair point to make that this is already the case (direct or indirect). It wasn’t aimed solely at you. It amazes be the number of people who can’t discuss something without getting so personally chippy about it.

Sorry bold fail

Or being dismissed as a troll

How about, we keep the current IHT thresholds & limits and those that feel strongly simply donate their vast wealth to the state? Then everyone's happy. Perfect