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.

People including parents should be able to leave their already taxed wealth to whoever they like (cat shelter, children, random person they shacked up with the month before). It's nothing to do with fairness, it's their money and their decision. It's not anyone else's business. Envy is a very unattractive human quality.

So, in summary, I don’t think the threshold at which IHT is paid should be lowered. I think the poll reflects that?

YABU 81%
YANBU 19%
284 votes

Again, the government is entitled to people’s’ money in some circumstances, so just saying that they aren’t is asserting your opinion, not putting any arguments forward.

Human nature is to look after your own.Always has been and always will

I agree with this, but some of the advances that many people hold dear rely on expanding our view of ‘our own.’ Hospitals, fire service, police, schools. Tax pays for all these things, so to me again it comes down to choices on where it comes from.

There are numerous ways of raising and spending taxes to fund state provision of services. Political governance and management/preventing waste/corruption in the system would be more effective than lowering or removing the IHT threshold.

Mocho - what’s your point ? Your friends still have jobs and have bought houses . Are you saying that they should then hand it over to someone else because they don’t have anything ?

My point was a contradiction to your point that bad decisions are why people don't have lots of money to inherit. Most people won't be impacted by IHT as the threshold is high but most people living in million pound plus houses haven't worked for that, my family included.

I said upthread though that's it's pointless pursing as IHT is deeply unpalatable.

There are numerous ways of raising and spending taxes to fund state provision of services

This is true, but I’ve not really seen anyone address why IHT is a bad thing, as compared to any other way.

Political governance and management/preventing waste/corruption in the system would be more effective than lowering or removing the IHT threshold

True. Sure there are always ways to save money, but you will always need to earn a certain amount to find services (assuming you agree they should be there). Therefore no matter want the amount you need is, the question of where it should come from still seems a valid thing for us to think about.

I agree with mochojoes though - politically it is tricky

I wonder what the people opposed to increased inheritance taxes think about higher tax rates proportional to income?

The overarching argument against increased inheritance tax seems to be "people shouldn't be taxed for being sensible and saving for future generations". In that case, one could argue (and they do!) that people who earn higher incomes do so because they are more "sensible" and hardworking and therefore shouldn't be punished by paying a higher rate of tax.

Some of my friends who are quite well off have argued that they since take up "less state resources", they shouldn't have to pay for people who can't make"good decisions". I'm guessing those of you who are against increased inheritance tax agree with this sentiment as well?

You need that money to move house. The housing market would grind to a halt if it was taxed.

Capital gains tax isn't 100% - you'd still keep the vast majority of the proceeds of a house sale. Paying a small proportion of your profit in tax may have a beneficial impact in reducing house prices too due to simple supply & demand economics.

I personally agree with @DogsDinner - but regardless it might be more likely now given the effects all of this will have on the economy.

I'm guessing those of you who are against increased inheritance tax agree with this sentiment as well?
Nope, I have no problem being taxed more for earning more. In fact I was taxed more this year on my bonus than I was last year as I now earn more.
There is something unpalatable in the state taking money once I’ve died, denying my (and many parents) last rights to leave money to their child.

I would also say political will has a big part to play - regarding where to fairly and efficiently spread the tax burden and where to spend those taxes. My comment wasn’t only about saving money, but priorities and also competence of decision making. For example - austerity, the inequality and reduction in funding for education, whereas Brexit and protection of off-shore investments have seemed to be a more important focus.

@plainsailing - that’s the problem with assumptions and generalisations. Income tax is banded on income levels. Are you saying there should be higher rate tax at lower banding?

@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?

YABU... tax them their whole lives then tax them when they're dead. I hate this. This law/tax should be abolished. It's governments benefiting at a difficult time for all and its despicable...

I also think IHT should be abolished. You pay tax on it once when you earn it and buy property. I should be able to do what I want with my money without having to pay tax on it just because it passes on to my child. We don't actually have more than the threshold currently but I just don't like it in principle.

Tax is paid when money or property goes from person to person (Including companies, which are legal persons).

Inheritance tax is paid on money that is inherited. It's not paid by the person that left the money, they are dead. If making x amount of money and hanging on to it was the summit of their ambition, they achieved it; you cannot take it with you.

I'd like to see IHT limits a lot lower and do away with the spouses allowance. This would impact me and my children, but it would be much fairer and normalise the idea of paying tax. I'd also like to see IHT rates starting from a lower band per recipient, in the same way that income tax does.

I actually don't want to pay more income tax or at least without the assurances that the NHS will be free when I'm 60 plus & that my state pension won't exist.

Plainsailing - I think we can agree that the salary you earn is not dictated by your usefulness to society. If it was , all the NHS staff would be millionaires .
Taxes should be paid on earnings. What people do with those earnings after the tax has been paid is up to them . Some will spend it on holidays and cars and plead poverty within a week of a pandemic . Some will save it will the intention that it is passed onto their children so they have a secure future and don’t run to the government for support .

Glad to see I’ve got some supporters, I’ve been on Mumsnet long enough to know I wasn’t going to make myself popular!

I can understand people liking the status quo, I just can’t understand how anyone can argue it is right or fair.

Why link it to COVID19 though?

Yabu. The dead person will have paid tax on their earnings all their life, its very unfair to tax them again when they die.

Why not target the super rich, who seem to escape taxes, P Green for example.

@DogsDinner There's an interesting study I read which explained how certain taxes, especially when branded as inheritance/death or wealth taxes, actually provoke a strong negative sentiment from the middle classes even though the people who are going to be hit the most are the wealthy. This is because the middle classes aspire to be wealthy and would like to think that, one day, they will have so much that they can pass on to their kids that this tax might ruin that for them etc.

The proven reality is that without these taxes, the state is forced to take money from the middle classes far more than the wealthy because the wealthy don't accumulate or propagate their wealth via "income", they do so via assets and capital gains.

I agree with that @plainsailing01

It’s linked to covid19 because tax revenue is likely to be reduced in the inevitable recession, so the government will need to raise extra money from somewhere.