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.

I think it’s fair that inheritance is taxed, but not the way it works at the moment.

It would be fairer if individuals were each taxed on what they actually inherit, instead of the dead person being taxed on what they leave before their family sees a penny. That way there could also be provision made for situations like the one OnlyFools was in. It would be less brutal if the tax could be paid when the actual gain was seen - as in when the house was sold.

That would also deal with the issue of paying tax on what a property has gained in worth. The value of a house is meaningless until it’s actually sold, until then it’s still the same pile of bricks it was when it was worth less. The actual value of things can change very quickly, as we’ve seen with the virus.

There’s enough tax as it is. Tax on what you earn, what you buy, what you use, what you save - then you want to be taxed even more on what you leave behind? They could tax winning lotteries and the like, that’s not exactly hard earned cash.

Not quite sure where OP is getting facts of £1M, this is from the government's website - The standard Inheritance Tax rate is 40%. It's only charged on the part of your estate that's above the threshold. Example Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).
www.gov.uk › inheritance-tax
Inheritance Tax - GOV.UK
As others have posted tax will be paid from the deceased estate on inheritance above the threshold. Once received tax will again be paid by the recipient when purchasing through VAT, from investments by CGT and again in death. Don't forget tax will have already been paid by the original accumulator by either income tax and CGT aswell so effectively it's been taxed twice.

This:

I think a better use of time and energy would be looking at tax avoidance by large corporations, such as Amazon.

Far too much £££ leaves the UK for overseas, hidden tax havens etc. This is where the government could recoup lots of tax

And I’m not saying people shouldn’t be able to leave money to their children, I agree that might create perverse incentives. Just that it should be taxed, like most of our other income is.

Where people are getting the £1m from is that it is £500k per person. Thus a married couple can leave £1m between them. With the person first to die passing on their share to the surviving spouse.

It’s a million pound threshold if it’s 2 parents leaving money, including the family home, to their children or grandchildren. People seem to find this hard to believe.

At a slight tangent but did you know that HM Land registry has connived with the wealthy landowners and indeed The Royals for decades in hiding their wealth and helping them avoid taxation? The reason why is that land or property is only registered at the Land Reg if it is bought or sold. As the wealthy landowners and royals have experts to simply pass it on through the ages, its never registered and so we have no true record as to who owns all the land and property in Britain.

NailsNeedDoing Your suggestion of taxing the recipient is exactly how the Irish system work. There is a maximum threshold which varies depending on your relationship with the deceased and one for each person's lifetime. This method does mean that the value of the estate is spread about a bit more to remain below the thresholds.

Agricultural land falls under different IHT rules, exactly the reason the likes of James Dyson, Jeremy Clarkson own farms. Dyson has more acreage than HRH Queen.

and of course it is a bit unfair to single people who may have children to leave their assets to. For there is only half the tax free amount to leave - as if they have not already had a difficult life raising children single handedly.
I have a modest property (very few savings) worth about £400k - my children who inherit would have only £350K tax free and the next £50k would be taxed at 40%. Had they been 'lucky' enough to be from a 2 parent family - no tax at all would be paid when the second parent died and left them the whole amount.

I appreciate there are many who do not have sufficient money to even leave the £350k tax free amount

and of course it is a bit unfair to single people who may have children to leave their assets to. For there is only half the tax free amount to leave

Don't follow that at all. One person is likely to have earned less, saved less, bought a smaller house, etc than a couple, so will probably leave a smaller inheritance. A couple, especially if they both worked, will have bigger earnings, bigger savings, bigger pensions, etc., simply because there's two of them. Hence, why they die, they get two IHT allowances - one each. I just can't see how that's unfair???

It's the luck of the draw, isn't it? And FWIW I had to pay a huge amount of IHT because my mother didn't trust me not to fritter away her money and so didn't make provision!

Yabu. I will not inherit a penny so am not protecting my interests.
Repairing the economy needs business and innovation not pick pocketing people with money after they die. The world is unfair, there will always be people with money who find ways to keep it. Just like their will be people who have little who find ways of getting it. As a side note. You sound somewhat green eyed in your opening paragraph and that could be the root of your opinion. It’s ok to admit that. MN won’t judge ... much

The main reason for people to be outraged by is usually fuelled by envy. They only disagree with it because they see people close to them vastly benefiting from it when they don't/won't and they don't like 2hst they see as unfairness.

One close of friend of mine us due to inherit a very last dum of money. She has just lost both her parents to Covid19. They were in their 70s but very healthy. She would all the money back and more to have them back.

To know that people resent her for the money she is getting as indeed, some people have dared to tell her in a trying to be light way tone that she had it good coming in, is upsetting her double.

Some people can't help resenting any one getting what they don't have and never will. It's pathetic.

I won’t receive any inheritance as my parents were poor. I don’t think inheritance should be scrapped because I’m not bitter

People are also making the huge assumption that the person inheriting never did anything to earn it.

I will inherit a reasonable amount from my parents assuming it isn't eaten up in care costs, but I help them manage that money and the properties much of it is linked to. Just because it isn't in my name yet doesn't mean I haven't worked towards it.

I think it depends what the tax is used for. For a long time, I’ve thought IHT should be higher but hypothecated to fund social care (so that those like the children of dementia sufferers are not penalised by having their estates depleted by having the cost of care paid for by the estate). This would be a way of making sure everyone with assets funds social care, whether or not they need it.

But I must admit that since CV, inside I find myself feeling much more socially illiberal and much more inclined to want to hoard my own assets - house etc - and pass them on to my own children, now that their futures look less secure.

This is why we will need a really bold and courageous government if anything is going to change, as it may be that lots of nervous, previously socially liberal people are privately feeling like me.

nailsneeddoing I totally agree with this. I think it was in that resolution foundation report, led by that well known communist jealous leftie David Willets.

I’m always really surprised by attitudes to IHT. The fact is, money needs to come from somewhere. It seems odd to me that people would rather huge amounts of unearned income are untaxed, meaning more has to be taken from earned income. Especially because it’s often accompanied by the ‘Ive worked hard all my life’ narrative.

Increasingly wealth being is being generated by owning assets (ie wealth goes to wealth) rather than earnings for work making it harder and harder for people who don’t inherit to ‘catch up’. (Yes this is a general trend before anyone comes here with outlying examples).

A limit for how much an individual can be gifted before paying tax seems a fairer way of managing income to the exchequer and would be harder (not impossible obvs) to avoid.

I understand why people want to target it & of course plenty of people haven't worked hard for it just bought a house at the right time. However it won't affect the 0.01% & for a vast percentage of the population its unpalatable.

Think they won't have the political capital to spend on that.

FFS. This makes my blood boil. My grand parents and my own DM worked very hard. Never took any holidays abroad. We didn't eat out. We had a lovely childhood but it was in no way extravagant. They paid tax on their earnings. They saved what they could to ensure they could access decent care homes if they needed it. I've told DM to spend every penny. I am not entitled to it. I want her to use it for herself however she likes. However, why the fuck should the government get another 40% when it's already been taxed.
Likewise DH and I come from working class families. We were lucky to get a university education and we have worked very hard to build our home. I want our children to inherit and allow them some freedom when we are gone. There is no shame in that.
So no I totally disagree with the OP and those who seemingly begrudge decisions we - and our previous generations - make to try and leave something behind.

I am the child of a single mother, I myself and now a single mother. I own my own home through no inheritance or gifting, just hard work. My children have no hope of getting on property ladder without my help and if they don’t, they will have to rent which means the wealth accumulates with property owners. For the vast majority of people, already helps redistribute wealth on assets already taxed and taxed again.

Death duty/inheritance tax should be completely abolished. It's revolting that I can save like crazy for my DC and the government can take a huge (40%) chunk in tax

There are legal ways of doing something to prevent or at least minimise this if that's your cup of tea. After all the tax has been paid on the money already, inheritance tax is taxing the same money twice.

That's the problem so many people have to rely on their potential inheritance just to get on the ladder. I would much prefer they targeted foreign owners & landlords more heavily.