To think scrapping inheritance tax would not be popular with voters

[Lanadelday]

I'd say I can't believe the conservatives are considering it, but nothing surprises me any more that they do. But AIBU to think most people wouldn't back this anyway- I can't see it being a big vote winner and don't think they really get that voters are sick of all the inequality and so many people including kids and elderly, living in poverty, not wanting to make it worse.

I would rather lose the triple lock and get rid of inheritance tax. I work to give DS the best life possible and we should be able to pass that onto him and his kids on the future without spending a fortune on an accountant. The problem with this country is we don't reward hardwork enough

NHS cost £180 billion
IHT raises £7billion
So chickenfeed really, just 3.9%.

Costs of administration of IHT is the highest of all taxes as a proportion of the amount raised due to the complexity, expensive tax disputes, court cases, etc., Because the figures are large on a case by case basis, disputes often end up in court as you could be talking millions in dispute on a single case.

Far better to raise other taxes which are simpler, such as VAT which basically administers itself because the admin burden is on business!

@Verv That's fine until it gets really expensive, isn't it? Even with private medical insurance you get into not covering pre-existing conditions. I guess you could hope for the best - but paying tax to fund a working health service/care service pools the risk to you as an individual of those expensive things happening.

One of my DC had a form of childhood cancer – completely unpredictable, but it would have wiped us out if we'd had to go private - or been in the States. And that could happen to anyone, at any age. Instead, it was promptly dealt with by the NHS and we were able to continue working from a stable home – and paying a good level of tax.

If the inherited home becomes the beneficiary's second property then it wouldn't get the main home exemption, but they're not being charged anything until they liquidate the asset (if they choose to do so).

This is how Australia does it:
https://www.ato.gov.au/Individuals/Capital-gains-tax/Inherited-assets-and-capital-gains-tax/How-CGT-applies-to-inherited-assets/

@Badbadbunny I have no skin in the IHT game, since I'm not likely to inherit anything. I don't mind if it would be IHT or something else that I'm more likely to pay.

What would your something else be? VAT? I guess that affects everyone who buys anything, including the lower paid. But maybe we could have a higher rate of VAT on luxury goods and zero rate essentials, as we do for children's clothes and some types of food? The tax on a designer handbag could be what - 50%? 100%? (I mean, it already is but currently the brand that makes it gets a lot of that). SUVs could be taxed more heavily, since they are essentially unnecessary.

I'd have a really hefty carbon tax affecting flights past the first return journey in each tax year. Maybe it would rise more slowly for the second return flight but be eyewatering beyond three. I'd tax school fees. The money could all go into improving the 'essential' versions of these things - from a low carbon economy to investment in state schools. I could quite get into this. Tax lottery wins over a certain amount? Meals out costing £xx or more per head (£100? £200?) could attract an extra level of tax?

@Changes17 Possibly but I started paying health insurance in my early 30s so my only pre-existing was asthma.
I already pay tax to fund a health service, and despite a nation paying tax into the service its still crippled, so what good is an additional 7 billion going to do?
Nowt.

It isn't a popular tax. Death duties have been around forever and have never been popular. However, it is deeply misunderstood by many people who say they don't like it without understanding it.

Currently, a married couple (on the death of the 2nd person) could leave an estate of up to £650k before any IHT is due. A single person could leave £325k. Pension funds are exempt, as are any life insurances written in trust.

But homeowners whose children are beneficiaries can leave up to £1m (married couple) or £500k (single person).

So elderly dad with £400k house, £500k in pensions, some life assurance (written in trust) and £100k in savings/investments - not a penny to pay.

Wealthy widow with £750k house, a £800k pension fund and an investment portfolio of £300k - the estate would pay £20k inheritance tax. The pension fund is excluded and, of the rest, only £50k is subject to tax, if the kids inherit.

The vast majority of estates do not pay inheritance tax. It is a tax on the wealthy.

And yes, my kids will likely have to pay it when we die and no, we don't care to put mitigation measures in place - they'll inherit £500k each and only be taxed on anything above that, so they'll still be far better off than most.

Inheritance tax revenue is a drop on the ocean compared to what the NHS costs. Personally I would look at what works in other countries, and see whether those things could be implemented in the UK. For example, would the Bismarck model work better than the NHS/Beveridge model?

I would also look at what is likely to attract wealth and investment to the UK, and encourage growth.

Agree

Our family have just paid a lot of IT and my feeling was I would be happy for a huge chunk of my relative's money to go to the government if it went to help people, but it seems extremely likely it will just be wasted. That's what I resent. I would prefer to get the the money and then I choose how much and where to donate it (which i am doing with what I did get).

96% of estates never attract any inheritance tax so honestly I don’t see that it’s a pressing issue for most of us.

Or your relative could have saved you a job - charity donations are exempt of inheritance tax.

It's not.

But it is a pressing issue for the people trying to decide who will Britain, which is why it's been trawled through the fish tank of social discourse.

@Blossomtoes Yes I did start thinking along these lines, e.g. if a better system would be to offer tax relief on donations from inheritance but that would probably be very complicated!

My relative did donate to charity in her Will but it was not a huge percentage of her estate. She had saved a lot of money to pay for care in her old age but sadly died before that was needed.

I don't know the ins and outs. But I suspect you could have used a deed of variation to donate some of your share to charity and ensure it was IHT free.

Inheritance tax should be scrapped now more than ever. The generations below are coming up poorer and poorer than previous generations and will need every bit of help from dead family that they can get just to buy a house and secure a roof over their head being as the council can’t even house all our homeless either!

I think if people can see past the politics of envy, they realise that it's a terrible tax - and as such I think even if you wouldn't have to pay it, many would agree that scrapping it would be popular.

I can't fathom how anyone can think it's fair or a good idea that after working hard to accumulate property and savings all their life that the government should be entitled to swoop in and take it. And they DEFINITELY can't spend the money well.

I think this is a left/right issue with the left basically believing that all wealth belongs to the state, you are allowed to play with it whilst you're alive, but after you die it's theirs to do what they wish with. Not on, and I'll be doing all I can to make sure I avoid it when I'm gone.

Presumably you can't fathom tax full stop then because every year the government "swoops in" and takes the money I have worked hard for all year.

What's more I actually need that money now and can spend it now, whereas when I am dead I don't/can't.

I would far rather reduce whatever inheritance I stand to get in the future & pay less income tax now as I do think they should raise the bands.

Inheritance tax should be scrapped now more than ever. The generations below are coming up poorer and poorer than previous generations and will need every bit of help from dead family that they can get just to buy a house and secure a roof over their head being as the council can’t even house all our homeless either!

And what about those who don't have much to inherit?

Completely agree with this.

Those who have nothing to inherit are not affected, same as those now who don’t have anything to inherit.

Why should people pay inheritance tax on money that has already been taxed before it was spent or saved?

Those who have nothing to inherit are not affected, same as those now who don’t have anything to inherit.

But scrapping it will just increase inequality & because of low wage growth, high housing costs & lack of social housing whether your own parents own & can help you is more important to many young people than your income which is crazy.

all of which are deeper issues that IHT revenues have negligible impact on. It’s the proverbial bandaid over the bullet hole.

and if it does indeed act as a disincentive to economic growth, then it may very well be costing more money than it is collecting.