Inheritance tax to be halved

[WildWhippet]

The government intends on having the rate of inheritance tax in the autumn statement.

Is this a good move? Will it encourage you to vote for the Conservative Party?

Personally I think the sensible thing would be to raise the tax free threshold before you start paying inheritance tax, as it hasn't kept pace with the rate of house prices so perfectly 'ordinary' people end up paying it. I do resent the idea of paying income tax on earnings, buying a house, paying stamp duty on the house, and then your beneficiaries also paying inheritance tax when the inherit the house (if over the threshold - I think about £500,000 per person if the estate includes property and passed to a direct descendant - and you can also claim a spousal nil rate band if was jointly owned, so £500,000 if one person or £1m if two). Ok I know £1m is a lot of money, but plenty of houses in the south east cost that now. But if only one person owned the house, and it's valued over £500,000 (which plenty are) and they die and want their children to inherit, they'll pay IHT.

But no, reducing it wouldn't induce me to vote Tory. Literally nothing would induce me to.

VAT is double taxation as well but people seem to give that a free pass. Probably cos poor people also pay it.

I earn a good salary, and pay a lot of tax. I have absolutely no problem with paying that as tax pays for useful things like healthcare. I am by no means very wealthy though.

BUT with IHT you're effectively paying tax for the third time (albeit not you, the beneficiary of your estate) in that you pay income tax on the money you earn and save up to buy a house, you pay stamp duty when you buy the house, and then your children pay IHT when they inherit the house. And I do resent that, and don't think there's anything distasteful' about that. And I'm very much a lefty, and yet I still resent IHT.

But trusts pay tax when they are set up, another slice every 10 years and a slice when they are wound up so it's not true to say they never pay IHT - because in reality it's just paid over time! I can't remember the rates and I'm not looking them up, but I think its 6% every 10 years plus 25% (20%?) up-front and the same at the end. But, its easier to manage cashflow wise, and increases the liklihood of estates remaining as a whole (like the Westminster one) as there's not a 40% haircut everytime someone dies, forcing a sale.

Likewise Agricultural Property Releif only applies if you actually farm the land...which at least Clarkson does in a semi-hands on way. Dyson, who owns many multiples more land than Clarkson almost certainly doens't go near a tractor, and in my view shouldn't be allowed to claim APR. But then, maybe his land is in a trust so he's paying anyway?

Tryingtokeepgoing yes you're correct re the trusts, 6% every 10 yrs.

@Flickersy
How do HNW do it now? What sort of fees are there? So many loopholes have closed.

BUT with IHT you're effectively paying tax for the third time

And ?

Every time money changes hands it is taxed in one form or another.

@Lemonyfuckit It is the same for CGT that is levied on properties that are not principal private residences. you may well have bought a property using post tax income, paid stamp duty and then pay tax when you sell it.

The basic issue is we need taxes to fund public services and as the population ages getting most of the tax revenue we need from taxes on income is going to be more challenging. Taxing the estates of the dead a reasonable amount seems to me like one of the less regressive ways to do it, especially since much of that wealth is from unearned gains in housing equity.

Trusts are still popular as the IHT is spread, and it allows them to lay money away for future generations which can't be meddled with by the family - tax is not the only reason to set up a trust.

But mostly it's just sensible planning ahead, making sure you give away assets which are liable to IHT in good time, weighing up the CGT vs IHT payable on those, and insofar as possible trying to make sure you only retain those assets in your estate which can be relieved. And taking out life insurance which would cover potential IHT should you pass away (mainly only beneficial if you're young and very wealthy).

@tamsinrsmy how did you pay 200k tax on 2 mill? Would it not be 40% of the non exempt part which is 1 mill and you get charged 400k tax!?

I find generally people are in favour of cutting taxes they think they will have to pay and increasing taxes they dont think will apply to them. Regardless of political affiliation.

Exactly - for most 'normal' earners, their estates on death consist of their house, the gain on which as never been taxed, their ISAs, the gain on which has never been taxed, and for those with DC pensions, their pension funds, the gains on which have never been taxed. I have no issue with IHT, but I don't think it should discrimnate between those with and without children. Everyone should get the same allowance. Transfers between spouses should be exempt but that's it!

It’s personally good news as my divorced parents were contemplating remarrying to help IHT as would only be payable once or something then (they have quite a lot between them).

But no, wouldn’t influence my vote.

Nope. Not true here.

I stand to benefit personally from the cuts to inheritance tax. I am not in favour of the cuts at all.

Personally I think Inheritance Tax should be abolished altogether. Very few people pay it anyway. Wealthy people who would likely be the highest payers jump through hoops to avoid paying it.

Edit. I forgot to add that it would take quite a bit more than a reduction in inheritance tax to convince me to vote for the Conservatives!

There won't be anyone affected by inheritance tax who will switch to vote conservative solely because of a reduction in the rate.

The narrative is relying on people being too thick to understand it doesn't apply to them. A friend told me the other day her mum wanted to put the house in her name now to avoid inheritance tax. She lives in a 3bed ex council house in South Wales. Tories don't have policies anymore - only propaganda.

That is like people who don't understand tax thresholds.

I personally would tax inheritance (with some carve outs for spouses and dependent children, people inheriting all or part of their primary residence and some busenisses) as income.

Old Rees-Moggy can sleep soundly now. I’m so glad for him, it must have been such a worry.

I disagree. Your father probably worked hard to pay off his mortgage and set you and your sister up. We should not look at parents doing this as a negative thing IMO.

I’m really tired of the apologists feeling bad their parents set them up. Parents should want the best for their kids and this ultimately reduces reliance on the state.

It’s a death tax that isn’t affecting the super rich. The limit has not changed since 2009 I believe when prices of homes were vastly different.

In the south you’re having a laugh if you can get a family home under 400k, good luck convincing people to work hard to pay their mortgages off if they know it’ll be taken for care and then IHT if they try and pass it on. We already have abysmal productivity and stagnation in terms of spending and saving.

I get there’s a lot of envy and I get it as I come from a rubbish background myself and will inherit nothing. However; my children will inherit as much as I can give and how dare anyone tell me it’s not fair that I’ve busted my rump to make sure they’re set up unlike I was. They shouldn’t apologise for their working class mother hoping to set them up from beyond the grave after a lot of sacrifice.

What inheritance! It will be used up paying for social care. So more like 1 or 2 % of people will get it.

In that scenario, you could look at it like that. But there are other ways people accumulate wealth, not just from a rising property market.

Some people earn it and save their taxed earnings. Some people pour blood, sweat and tears into a business all their lives, pay corporation tax, employment tax whilst working in the business all their lives then sell it and pay capital gains tax.

So distasteful that some think it’s their right to take out of the pockets of others. What constitutes paying their dues?

For example is a high paying speciality Dr (82k average at that point) allowed to keep his money but a lawyer not?

Shall we work off morality points ongoing for who can keep their money? This is a very sketchy place to get to as a society.

When people say only 4% pay IHT, I’d love to see figures on how many fell out of the bracket due to funding their own care. This is an important stat I’m yet to find.

It wouldn’t affect him anyway. I’m under no doubt his money is in art, trusts, offshore accounts etc.

I doubt it would be possible to look into that on any real scale to be honest. The data would be too difficult to gather.