To think inheritance tax should pay for social care

[Wouldloveanother]

Just that really. Saw somebody else mention it on here and I think it’s a brilliant idea!

That's not the fault of the person who bought it though... so why penalise them or their family.

You're not penalising them, they're dead. This is a much fairer way to handle the untaxed windfall than other measures that hit while they're alive such as property or wealth tax.

Their family still gets an unearned windfall, just less of one than if it hadn't been taxed. They're not 'penalised', they're being part of society in the same way as people paying CGT, income tax, VAT...

Continuing health care is based on nursing needs not diagnosis, so someone with dementia could get CHC funding if assessed as eligible.

We really need people to get out of large houses in catchment areas and this might help.

This makes no sense... if all the large houses around a school are taken up with couples with no kids, the catchment area just gets wider 🤷‍♀️

You do realise there's no such thing as a catchment area? The school just casts its net as wide as it needs to each year to fill the school.

IHT is the fairest tax there is.

"Hi, taxpayer. Having a civilised society with health care and social care and education is insanely expensive. We know you can't afford to pay for it all through taxation while you're working and raising a family, and won't have a big enough income in retirement to do so. Instead, we'll keep taxes moderate and take the rest off when you've died and don't need money anymore."

Those who - through luck, good timing, hard work or inherited privilege - amassed greater wealth will send more back to the public coffers than those who didn't.

I have a question relating to something one of the pp said.. that her and her dp stand to inherit a portion of 6 properties that their parents own. Is it part of the problem in this country that comfortable/wealthy people buy up properties to rent or air bnb out, meaning less availability for younger people to get a foot on the housing ladder? Sorry I know that isn't about inheritance tax and I don't mean to derail or be goady but it's something that really concerns me and has done for a long time.

@CrystalCoco

Excellent post and one I could have almost written
As I've said my parents, dad was worth around the million but as he remairred when I was 21 when mum died, just before he died years ago he wanted to leave me something I said thanks but no dad as you have a new family.

My wifes family worth a mill or so because of our culture most old timers leave everything for their son/s. We were happy with that as we have always stood on our own two feet

We have worked hard non of the family has ever lived in a rented property we rarely use public transport other than children at times going to their HQ's in central London . We gifted between our kids recently around 500k they did not want it all work all have a property to live in and or BTL

We still have money and property and like most pay taxes on it again and again CGT etc etc on top of PAYE, taxes, NI etc etc

Why should our prudent spending working hard always support those that are or had the capacity to work but could never be bothered to be prudent with their money EG not live hand to mouth and live off credit cards?

I'm not referring to those that worked and lost job/income via ill health but the millions who by presnets, go on hols, buy phones, sky cars etc on credit - why buy a car for 40k and repay 60k when you could save up and not pay interest

Having said that, I have always found that those with hardly anything in their names will always support taxing not just the rich but ordinary people who have worked hard and spent and saved wisely as they want to jsut support their kids, grandkids and ensure they are not a burden on the state when they retire so thos that really need help can get it.

Good luck to that person - their parent have paid taxes on taxes - why penalise someone for hard work and prudence?

Trust me, if taxes keep on rising and IHT is raised we'd buy new cars, fly first class and 8 international hols a year and millions of others would do this and as a result IHT receipts would dive

@JamesBondOO7 how have they paid taxes on taxes? Sorry I'm not very knowledgeable about these things..

If you were married and leave your estate to a direct descendant IT relief is over £1m (2x 325k relief plus 2x residential nil rate bands). So I'm not sure how much that would raise.

Apparently fewer than 1 in 25 estates pay inheritance tax.

If the proposal is that those people pay for their own care, that's OK, but hardly going to solve the societal issue.

If the proposal is that those people pay for themselves as well as 24 other people's aggregate costs, then yes, I can see how a measure that means nearly everyone would benefit from someone else's money would be popular.

(I've ignored whether there is actually enough money, which is a separate but valid issue.)

IHT only raises about £3 billion a year, I believe. Nowhere near enough to pay for social care. I'd support higher IHT rather than higher income tax. Why should some people get a windfall which they haven't earned and others not?

Apparently fewer than 1 in 25 estates pay inheritance tax.

IHT only raises about £3 billion a year,

Probably related

Indeed set the limit at 0 and it will soon raise enough.

We have worked hard non of the family has ever lived in a rented property we rarely use public transport other than children at times going to their HQ's in central London . We gifted between our kids recently around 500k they did not want it all work all have a property to live in and or BTL

What has working hard got to do with renting a property?

This is incorrect - you get the 325k nil rate band OR the 500k residence band, not both. The maximum anyone can get (if second surviving spouse) is £1m nil rate band.

Also to a pp who says they know someone who inherited a £1.5m property tax free, this is either not true or there’s another factor (trusts etc.).

and to the pp who said “what if you bought a property in London for 800k and now worth 3.75m… well you’d pay £1.3m in IHT, that’s what if. Seems quite a lot to me.

FWIW I cheerfully paid over £250k of tax when my mum died, and it meant we had to sell her house. I’m not quite sure how people on this thread want to increase it but it’s a toss up between collecting a lot and incentivising undesirable behaviour (people giving away/spending assets). 40% seems a good balance to me.

Also to a pp who says they know someone who inherited a £1.5m property tax free, this is either not true or there’s another factor (trusts etc.).

Or the 7 yr rule

I know loads of people who did it this way including my inlaws but obvs it's a gamble

Trust me, if taxes keep on rising and IHT is raised we'd buy new cars, fly first class and 8 international hols a year and millions of others would do this and as a result IHT receipts would dive

It would be great for VAT receipts, economic activity and job creation though. Win-win!

I think its a good idea, but tax isn't really ringfenced in that way also it probably wont cover it, would need to change thresholds etc .
It won't happen because IHT is unpopular with tory voters and donors.
Thats why the increase to NI has been scrapped even though our nhs and social care system is really struggling.
No one wants to pay for it and politicians will do whatever they need to to get votes

I think it would be very difficult to give away part of a property without falling foul of the rules about gifts with retention of benefits.

So yet again the loonies want to penalise those who have lived carefully and within their means to continue to support the profligate who either can't be bothered to work, and why should they, or have taken little care of their money. I worked, as a teacher, with lots of people on very similar salaries, the differences in how that monet was spent as eye opening. I was considered odd because we didn't constantly upgrade our cars or move to a bigger, fancier house and the system would now like to punish me for that!.. Since OH died I have takena numer of steps to protect what's moine and my family's money from the sharks.

Lots of typos.

money not monet (I wish)
number, not numer
mine, not moine

Going back to bed.

@FudgeSundae I don't understand your point? In the example of my relatives, the home was put in their name about 15 yrs before the parent died. Not part of it, the whole thing.

Also one of my parents friends recently took equity release to get their property value under 1m plus access some cash.

Assuming they continued to live in the house, this is called a “gift with reservation of benefit”, ie not really a gift. HMRC might have missed it in this case but in tax law this would still be part of the taxable estate.

equity release is fine, but if the OP’s ideal would involve more equity release there’d be less inheritance taxable assets, so less tax to fund social care.