To think inheritance tax policies need reviewing

[Passthecheeseboard]

So this is inspired by another thread I read tonight, which highlighted the issues of women needing to be married to have their rights protected in a financial way. At first the feminist in me was angry at the suggestion. I believe in my heart you should marry for love not financial reasons. And that a woman shouldn’t have to rely on a man for finances anymore in this way (it’s not the 1950’s anymore ya know 🙄)…

I believed if both partners names were on the deeds of the house/mortgage they wouldn’t be subject to inheritance tax. However another poster let me know that this is not the case and that the partners (who’s died) half of the house gets taxed. I just think this is so sad. Imagine losing your partner and then having to sell the house you have so many memories in before you have even had time to progress your grief in order to pay this tax… I can only imagine how sad and traumatic this would be…

I can’t help but think this is an issue of discrimination against unmarried women and I actually feel this to be a feminist issue. I just don’t think in this situation the property should be taxed. I understand if you come into an inheritance eg you inherit your parents wealth then it’s acceptable to be taxed. But I think that’s a completely different scenario… Surely as well the property you actually live in should be secure for the surviving partner.

More and more people are choosing not marry now, and I don’t think they should feel pressured to if they don’t want to or are not ready to. But they shouldn’t be discriminated against by policies like this. Am I being unreasonable to think this is hugely unfair?

At that age and in those circs, I think I'd have lied on the IHT form. If HMRC ever noticed or by the time they did, I'd probably be in the ground too. If not, I'd have told it to the papers - done the statutory "sad face" and everything!

If people could just declare that any person is their current "partner" and pass assets to them free of IHT and maybe CGT, we'd have chaos and rampant tax fraud.

To get the perks, you have to declare a commitment worthy of them. You can opt for civil partnership is marriage sounds a bit fusty to you.

The sad thing is that plenty of people are thinking of someone as just transient and passing through their life but having kids with them. You can see it on these boards - plenty of (bitter) women encouraging others to sling out the man for any old thing and raise the child in a fatherless home. They are then on the next thread moaning that young adults haven't been given proper boundaries etc growing up etc

I am not a lawyer but this article appears to explain the IHT position very clearly and in straightforward language, for both joint tenants and tenants in common.

beyond.life/help-centre/admin-legal/joint-tenants-vs-tenants-in-common-after-a-death/

I dimly remember the case. Haven't read the article, but surely the surviving sister could have borrowed the money for the IHT using equity release? No reason for her to lose her home over this.

I may be in a minority but I think more people should pay IHT. Most people passing on large sums to their offspring are only able to do that because of ludicrous house price inflation in the past few decades. That's at least as much luck as judgement and hard work. Interesting article in The Guardian about inheritance yesterday: www.theguardian.com/money/2022/dec/03/why-inheritance-is-the-dirty-secret-of-the-middle-classes-harder-to-talk-about-than-sex

Seriously if a man isn't "keen" on getting married, I don't mean the big expensive day but popping to the registry. Why have any permanent financial relationships/children without starting life together. with this "contract" women earn less and have less in their pensions once they have children.

I think the attitude to marriage is very naive on here. It is a powerful contract for women and the men know this .

Yes, if you are a woman, as OP claims to be, who thinks that marriage is all about romance and flowers and women don’t need to be financially protected, then your definition of feminism is not mine.

Marriage has always been about rights. For centuries women lost their rights and men gained their wives' money through it. I think it's good that more and more women are realising that if they have children marriage offers them some protection.

Imagine that you were an elderly lesbian or gay couple who'd lived with your partner for 40+ years. You'd created a home together, you'd merged your finances — and then when one of you died you had to sell your home in order to pay IHT.

That was the reality for every lesbian and gay couple in the UK until civil partnership was brought in and no one really gave a shit. Then in 2004 we were allowed civil partnerships and for the next 18 months I went to CP after CP, often in tears as sick, dying and elderly LGB folk were able to secure their futures.

You don't have to get married to secure your rights, anyone can have a civil partnership. I've been with my partner for 24 years and we are going to slip off to the register office on a Monday morning next year and sign the register.

Decades ago everybody knew where they were with marriage. There were many, many problems with the law and the moral values back then, of course, but when it became socially acceptable to co-habit or just have sex without being married, and especially to have children without being married, some men have been given the green light to behave really, really badly with no effective comeback. Women have been led down the garden path with all this nonsense about marriage being 'just a bit of paper'.

The wedding industry has managed to con many into thinking marriage can wait until they can afford a huge expensive wedding, and that leaves many people without the legal protections they really should have before having children together, or allowing their finances to become interwined, especially when one party is better off than the other.

Yes, of course, there are some wealthy, high-earning women who are better off not marrying in case it breaks down as they don't want their children to lose out to a cocklodger. However, the vast majority of women are not as well off as their male partners and they and their children would be better off in a secure relationship where the man's legal responsibilities are clear if the relationship fails.

The fact that some men manage to wriggle out of their responsibilities is beside the point. If the couple aren't married, the woman can be left high and dry, with no right to stay in the family home if it's in his name, no claim on his pension or savings, no right to maintenance.

And that's before we even start on the importance of being legally acknowledged as the person with the right to make huge decisions in the very sad event that your partner becomes seriously ill. Do you want your partner's parents or siblings to be the ones making the decision whether to turn off life support or not? Do you want to be the one organising the funeral? To be certain you can do these things, you need to be their legal partner, not just their cohabitee.

Gasp "Women have been led down the garden path"

by whom?

fortunately, IRL, I don't know anyone who doesn't understand marriage has legal connotations. Seems very prevalent on MN.

You can establish / name your next of kin for the purposes of making decisions, whatever your marital status.

Apart from anything else everyone should appoint POA and make a will.

Maybe there should be an IHT exemption in cases where there are multiple owners of a house, whereby you can lodge a charge against the house and IHT is only payable once the second owner dies (or the house is sold, whichever comes first)

From my perspective it’s just IHT tax planning thats required.

For example, If the share of the house that is to be passed on, exceeds the threshold, take out a mortgage on the excess. Invest the balance in a qualifying AIM company or fund, and its not subject to the 40% tax. Ideally the dividends will cover the mortgage payments, and as a result the estate gets larger, and more diverse over time. A will ensure the assets are passed on correctly and the beneficiary doesn’t have to sell anything, they just have to do their IHT planning with a larger estate.

You can avoid IHT using various tax exemptions and allowances with millions of pounds, unless it’s all tied up in property.

I rather think we in the uk have been socially engineered to think property is the best asset class, but it really isn’t because of its IHT implications for many families. ‘owning the roof’ isnt considered a cornerstone of family life in the same way it is here in most of the world. It’s made a lot of people to be wealthier to be fair, but i can’t help but wonder at what cost, with the treasury being the ultimate beneficiary.

Anyway, IHT planning is for everyone who might be approaching the limits.

This is a good point, and it does seem unfair when the property has already been taxed when bought in the first place. It is kind of like being taxed twice… I wonder if other countries do the same?

And yes I hadn’t considered a parent and child situation, which again isn’t heard of… Like if a person lives with their elderly parent (perhaps as a carer to them) and has lived with them for a number of years then I don’t think it’s right that the property is sold out from under them no. I wonder how many people are made homeless by this awful tax 😮

I mean it’s different if there is no one else living in the property and then once the person has died it’s being sold anyway, but when it’s someone else’s home as well it just doesn’t sit right with me…

Yeah this is kind of how I think, in that if people want to get married then that’s ok, but if a couple don’t want to or feel ready to marry for whatever reason… Then I don’t think it’s right to pressure them into marriage.

Also for some people living together civil partnerships aren’t even an option, like 2 sisters who live together. Lots of people live with their family.

The IHT system does recognise that this can be an issue and permits the IHT to be paid in installments over 10 years (or when the property is sold if earlier).

Then I don’t think it’s right to pressure them into marriage.

If you change taxes, inheritance, rights on splitting and the likes to including non-married couples then what about the pressure that puts on people who may not want to have a legal partnership so have chosen not to marry?

I think we actually need to tax inheritance more and then use the money to help those people who'll never inherit. The middle classes are getting richer and richer through inheritance.

www.theguardian.com/money/2022/dec/03/why-inheritance-is-the-dirty-secret-of-the-middle-classes-harder-to-talk-about-than-sex

Families are getting smaller and people are inheriting life-changing sums from an early age. For those who have been trapped renting for generations, there is no hope of competing with all the advantages of middle class families.

This awful tax? Are all taxes awful? Tax revenue is important. It funds the NHS, the benefits system and all sorts of other government spending which we need.

Example: John and Mary buy a house for £4000 in 1971. They spend a bit on it over the years, so it is in good condition and readily saleable. Their mortgage is long paid off. The house now has a market value of £500k. They have one child, Mark, who inherits the house and some money after his parents' deaths. Mark did not live with his parents. He now has over half a million pounds which he didn't earn. Please explain why this is fine and Mark should be entitled to inherit the entire sum without a percentage going into the Treasury.

If you want the rights of a married person you need to get married or have a civil partnership.
It's not discrimination, it's part of what you sign up for when you get married.
If you want to keep your finances separate and not get married that's fine as long as you don't expect the benefits that go with it

Sweden abolished inheritance tax. That is the route I would take. Only 10% of estates are big enough to pay it anyway so just abolish it.

if we have to keep it then I am not against everyone being treated as I am. Single so only the one tax free bit of £325k and no 500k even if leaving it to my children as the house is in the SE. It is all very unfair. As a single person (never mind if I were living with someone) my children are homeless because of IHT if I die. State steals 40% of most of what I have even though every penny of that has already been taxed at at least 40% because of my earlier divorce etc

Inheritance is dividing society - those who get it get homes those who don't get stuck paying someone else's mortgage with rent

We need more taxes - the NHS is on its knees , schools are underfunded- id take a lot more at death so stop the inequality rising ever more

I’m also a very strong believer in IHT - as pp said it’s for wealth redistribution. It’s not about “working hard” - most people I know now inheriting huge amounts from parents just got fucking lucky on the property ladder 🙄.

Would you ‘take the same route’ as Sweden for all taxes? Income tax, for example? Be careful what you wish for.

With IHT only 10% of estates may pay it, but it raises tax revenue that would have to come from somewhere else if it were abolished, and it comes from wealthy people’s estates. That’s fairer than poorer people paying more income tax. And tax is not ‘stealing’ by the state.