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.

Oh come on. Almost all of that is capital gain on which no tax whatsoever has been paid.

I thought Inheritance tax kicked in on anything over £325k? (I may be wrong) which is more or less the average house price in UK so majority of people will pay some? Have I misunderstood? I'm hoping that I have.

I wonder what percentage of the population understands the current rules? I often hear the "taxed twice" narrative and worries from those whose relatives are far below the threshold.

Ultimately I don't care anymore. I used to get quite angry about inequality but I've grown despondent. I just make the rules work for me in the best way possible.

@LauraNicolaides he saved and invested all his life despite living like a pauper. Never married so the full whack was payable on his estate.

There's no IT between spouses and the 2nd death benefits from both allowances, plus where property is left to children the allowance is higher, so most estates won't pay until they're worth £1m

I think it would be fairly popular - even though it would be one of those things which nobody actually ever admits voting for even though it’s obvious a vast proportion of people did, like Brexit. You only have to read an MN thread full of posters who think it’s a travesty that their elderly parent might need to use their own savings and sell their house to pay for their residential care, and trying to get around it, believing that other taxpayers - including those on the lowest incomes who don’t have savings or a house - should instead pay for the care, to realise that many people firmly believe they’re due an inheritance and want that protected.

It isn't inheritance being passed down that's fuelling inequality, it's the wide-scale artificial inflation of housing costs and the fact that pay has not kept up with inflation for decades now.

Inheritance tax (or lack thereof) would be a drop in the ocean when it comes to fighting inequality. Those who would benefit massively from its removal will already be very wealthy and therefore clued up enough to be as tax efficient as possible. Those that aren't wouldn't gain that much from its removal.

The inheritance tax take for the UK is miniscule compared to the income and corporate tax takes, so from the Tories perspective it's an easy win that honestly doesn't lose them very much money.

There are then ideological / moral questions either way about whether inheritance tax is right or fair, but they can be argued til the cows come home and there's no one right answer.

Additional £175k if property is being passed down. Also spouses have exemption and you can use unused IHT from spouse to reduce your IHT liability.

My mum has just died and left around £550k in her estate but we only need to pay IHT on the £50k because £500k is covered as some of that money is her share of the house.

About £1.4 million at the minimum would be my guess.

If you expect the "rich Tories" to pay for everything like Labour supporters seem to, does £1.4 million qualify you as a "rich Tory" or not ?

And if not then what does ?

Not if relative had a spouse and the house was passed to the spouse. The threshold can be up to £1m, as was the case for my family member and why we paid no IHT on £800k.

If you own your home (or a share in it) your tax-free threshold can increase to £500,000 if:

- you leave it to your children (including adopted, foster or stepchildren) or grandchildren
^^
-your estate is worth less than £2 million
^^
www.gov.uk/inheritance-tax/passing-on-home
^^

I'd be delighted they were scrapping it, it's a vile stealth tax.

Fortunately, there are legal ways around it (if you have a very good financial advisor) so regardless of whether they do or don't scrap it, I do not intend to pay a penny of it.

I do not believe IHT should be scrapped.

I am currently making a new will.
My estate will fall below the IHT threshold so none will be due when I die.
One company I spoke to regarding my will said that as no IHT will be due I could choose to create an "Asset Protection Trust", which would mean my estate could be administered without probate and would protect my property from Care Home fees.
There is no way I would do that. Apart from the moral issue of such a thing; if I need care in the future I wod prefer to have a choice as to what that would be, rather than what the council could/would provide.

Inheritance Tax was introduced after WWI - mainly to strip the Aristocracy of unfair amounts of inherited and un-earned wealth.
Because of where I live, houses with 3 bedrooms, but really only 2 double bedrooms plus a box-room, semi, are going on the market at over £875k. This means that my DC, once they have paid IHT on £525k, may not be able to purchase anything in the area in which they grew up.
Given that the average house price in the UK is £285k (figures from February 2023), Why is it fair that a DC of someone in an average price house could easily afford to get on the housing ladder, or go from a 3-bed to a 4 or even 5-bed, when those living in areas like mine can’t?
We have also already paid tax on the money we used to pay the mortgage, so why should it be taxed again, just because of where we live? There was an outcry when Tebbit suggested that people “got on their bikes” to find a job in a different area of the Country, and another one when the residents of Grenfell Tower were offered alternative accommodation miles away from Kensington, so why should homeowners’ families be similarly punished?
It would be much fairer if everyone selling a house was charged a sliding scale of %age of the sale price - that way, your “average” house might be charged 2.5%, double that at 5%, 3 times at 7.5% Etc. That would far more fairly distribute the Tax Burden to those that could afford it.

I couldn't care less about inheritance tax. What I would like is to see everyone paying their fair share, from high net worth individuals to large corporations.

If you're inheriting your parents' house then that's £500,000 and remember that's half a mil per parent, so potentially a million pound property tax free.

As was mentioned above, you'd think that the country was swimming in estates affected by inheritance tax but it's actually a very, very tiny minority that benefit from that kind of money in their family and have it to pass on.

This.

It's not really a question of whether you would prefer you/ your parents to not have to pay IHT. (Which of us wants to pay more tax?)

It's a question of what kind of country we will be living in, if essential services are massively slashed?
This would be a far bigger hit to spending on essential services than Liz Truss's failed tax slash, which crashed the economy so quickly that she had to reverse it.

After years of austerity, many councils and Gov departments have no funding for anything but the minimum.
What do you want to see savage cuts to? Education? NHS? Carers? Police?

It's pointless anyway because it's so easy to avoid with all the reliefs/exemptions etc. The punitive 40% rate also encourages people to plan to avoid it.

If it's to stay, the rate needs to fall dramatically to discourage avoidance planning, and the reliefs/exemptions need removing so it's harder to avoid.

More people paying, say, 10%, would bring in a lot more money and would be fairer, than a tiny number of people who didn't plan paying 40%!

Where you've got it wrong is that Liz Truss's tax slash was giving money to rich Tories, whereas removing inheritance tax would be giving money to rich Tories.

I can see both sides of this.

In some areas most family homes would take you over the threshold for inheritance tax. My parents home plus savings would be hit with a hefty bill, and yet all those savings have come from years of hard work and already being taxed on that earned money.

It's effectively a double tax on 10% of the population, most of whom are penalised for living in an expensive area.

On the other hand... where is the extra tax going to come from??

I live in the South East with a 4 bed family home, so will probably pay a huge amount of inheritance tax when I die.

But I guess I'd rather they took the money from the dead than hit hard the living!

My parents are doing their best to spend what they can now with lots of holidays. I'll probably downsize to a cheaper area one day then do the same!

It wouldn't be popular with voters- because for some reason, people think that it applies to far more people than it actually does. Very frustrating indeed. Because Labour can't then make its abolition part of sensible tax reform.

@GasPanic well I have no idea how he voted but he had a three bedroomed (almost derelict) house in London plus pension funds and other investments. He saved all his life rather than spend anything to the extent that his house was in a pretty bad state. He certainly wasn’t living like a rich man.

And we only have £50k to pay tax on because my mum made certain financial decisions in the last decade, which involved signing over assets and money to me to remove them from her estate for IHT purposes. Her main house rose in value to just tip us over the IHT threshold in the end, and I'll pay that with no argument.

If you have liquid assets that aren't tied up in property, it can be quite easy to reduce your IHT bill by gifting to your children well in advance of your death (with the usual caveats about deprivation of assets) and clever use of trusts for grandchildren and other things (my Mum also did this for my two DC).

The issue is that because of the rise in property prices in particular parts of the country, you have people whose money is entirely tied up in their home with very little access to actual cash, who have much less ability to mitigate an IHT bill. So there's a disparity there. Rich people can do lots with their assets, people who are in that middle bracket who are living modest lives in property that has soared in value are disproportionately affected.

But that's not what happens.

My parents worked, paid taxes, paid their mortgage (with tax relief on their mortgage payments). Never had a mortgage of more than £25,000.

Their current house is valued at around £450k. So has increased in value by approx £425k since the last mortgage. Neither of my parents have paid a penny in tax on that amazing increase in their assets.

My dad has now died, when my Mum dies my sister and I will inherit approx £225K each, none of which we earned ourselves, and we won't pay IHT because it will be under threshold.

I'm all for increasing IHT. Even if it was 50%, I'd still get over £100k.