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!

@FudgeSundae but if one does live in the house don't they just have to pay rent to make it ok?

getting a bit off topic, yes paying full market rent is an option but that generally makes it fairly rubbish tax planning since the rent will be taxable on the beneficiary at full market rate for at least 7 years.

Who's punishing you?

You've been careful with your money, made good choices and probably had some good luck (at least in the absence of catastrophe). Good for you. Spend all your money as you see fit. Fritter it away, travel, get the best nursing home money can buy if you need it.

After you die, what's left goes to someone else, who hasn't done a day's work to earn it or made 'sensible choices' apart from being born to/related to people with money to leave them.

You're not penalised. The beneficiaries of your will still get an unearned windfall, just less than without IHT.

As I say, it would probably make sense to stop
taxing estates and start taxing beneficiaries as if their inheritance gains were either taxable or income. It would be fairer as it would take individual circumstances into account.

It's also not true (or not exactly) French IHT varies between 0 and 60% depending on the value of the estate and the relationship betwee the beneficiary and the deceased. Children of the deceased pay a max of 45% and that's only on amounts over 1.8million euros, rates are tapered so the higher amount left, the higher the IHT. Spouses pay 0, more distant relatives pay more.

I know people whose parents have set trust funds and signed over their homes to them and boast that their parents won't be paying high care fees. Not sure how it works to be honest , but they are adamant that it works.

By that token, the people receiving the inheritance should be taxed on it, not the estate. In other words it would be taxed in line with their other income for the year. That would make much more sense to me as it would encourage benefactors to spread their wealth around a bit more.

Except that it shouldn't as it would be viewed as deprivation of capital by the councils who decide who pays for care.

There should be a scheme that everyone pays in to that runs parallel to a workplace pension to build up their own fund for any care needs The payments should get tax relief, then if or when the person needs care the fund pays for it, when the fund runs out the state pays. If the fund is never needed then the fund can be paid out to the person's family. Another option is to make caring for a family member financially more attractive, increase carers allowance, £69 a week is nowhere near enough for someone to be able to afford to give their job up to look after a loved one who needs caring for, even if it was increased to £250 a week it is still cheaper than the cost of a care or nursing home. There should be more support for carers, more information on how to care, training on simple medical procedures, things that HCA's would do in a nursing or care home, better provision for getting equipment & make it easier to get grants for alterations to make a home suitable for someone who needs care, things like stairlifts, level access bathrooms etc.

I totally agree, in fact the only thread I’ve ever started on mumsnet was to suggest we raise inheritance tax to pay for the costs of covid. I don’t think I got much support though!

The money has to come from somewhere. Inheritances often come from property that has increased massively in value. The money has never been taxed, and is passing to people who have not earned it, and will not pay tax on it.

There is the potential to raise a huge amount of money in a fair way with zero pain for anyone. The already privileged would still get a massive windfall, they’d just have to pay tax on it.

However, it’s an unpopular tax, this government has quietly made changes to enable most people to leave up to a million pounds to their children tax free, and I imagine on current form, their next move will be to abolish it altogether. Help the rich get richer!

Surely one answer would be a compulsory care needs insurance policy?
You can get £250k of life cover very cheaply so why not ‘care costs cover’? Given that a large percentage of people don’t need elderly care, it should be cost effective.

Inheritance tax should be 100% of the value of the estate. The beneficiaries have not earned it and we should all start as equal as possible in life, not have some get a massive undeserved leg up because they are someone’s child.

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

no, we want people to spend and share their money, rather than hoarding it until they die

Spend your money before you die - no IHT - or less of it, anyway

Hoard it, IHT.

Your choice.

Inheritance tax should be 100% of the value of the estate I think 100% is a bit harsh, but I definitely think it should be significantly higher than it is.

Totally agree and 20 years ago Germany introduced a care tax. If we'd done the same, we wouldn't be in this mess, Brexit and a loss of staff aside.

Exactly - this is my point. If people want to avoid paying IHT they need to stop paying expensive lawyers to come up with complicated trusts, give money to their kids while the parents are still healthy and likely to live 7 years at least and spend a good chunk of the rest.

I know it's not always that easy, people die suddenly or decline at an earlier age than they thought they would and hadn't had time to downsize or spend money, but everyone reading this thread who may have enough assets to pay IHT can think about it. Why sit on your money until you die when your child needs money for a house deposit now? Or why sit on it instead of enjoying some of it yourself while you still can.

Quite honestly, IHT is a tax on stupidity.

Speaks the voice of bitterness. Some people are always going to have a leg up in life, whether you like it or not.

If IHT was massively high , nobody would bother buying a house.
The way it's going with mortgage lending at the moment maybe buying a home will really be a thing of the past anyway. We will all be renting forever.
Don't know what will happen with social care though.

This has been shown not to be the case - despite very high levels of estate tax, home ownership levels increased significantly in the 1950s and 1960s.

The idea that people would forego the security and other benefits that come with home ownership (lower overall lifetime housing costs, security of tenure, greater control over future housing costs, ownership of a reasonably reliable asset with long term security of value that can be converted to cash in a time of personal need or crisis, etc) is not borne out by historical experience, even if it was logically likely (it doesn't seem so to me, home ownership is massively beneficial to me and my kids even if every penny of the value goes on care costs or tax at the end of my life; we will have got much greater value from that than we would have from renting.)