What % of all deaths (uk) resulted in an inheritance tax bill in 2021-22? you're not previewing try and have a guess?

[HecatesBees]

What % of all deaths (uk) resulted in an inheritance tax bill in 2021-22? you're not previewing try and have a guess?

Some 4.39pc of all deaths resulted in an inheritance tax bill in 2021-22 – a total of 27,800, according to official figures.

If your guess was higher, pick YANBU
if your guess was lower pick YABU

(I would have guessed higher, maybe even up to 50%

The people inheriting farms have quite often worked their backsides off on that very farm in all weather's, doing very physically demanding jobs keeping the country fed for very little money for decades already. They've earned it.

If one of your parents died first and left everything to the other, and then the second parent died leaving the family home to you, the threshold is £1m. (This is assuming your parents are married)

£325k for each parent = £650k
£175k for each parent if they pass their home down to a direct descendant(s). This gets passed to the surviving spouse in the same way as the normal threshold so an additional £350k on top of the £650k.

But the tax primarily affects value deriving from increases in house prices, which has never been taxed before.

Yes. I expect it is. I wonder what percent of children pay it on their parent's wealth?

Soupfiend
Totally agree. My parents estate might tip into IHT and that's fine! I'm bloody lucky to be a position to inherit anything. My own estate will definitely suffer IHT but that means my lucky children will each get a pot of money others won't, of course it should be taxed. I've earned that money but they haven't, and a lot of the appreciation in value of my home is simply living in the south east.

Meanwhile some of the people i know who will be hit and are annoyed (who are very wealthy indeed) are among the stingiest - the ones who don't buy christmas gifts for their grandchildren etc. If you share your money more earlier in life you can face less IHT but few people choose to.

I already knew it was 4%. The spouse exemption does a fair amount of heavy lifting there, one imagines.

Not really. A lot of residential properties will be jointly owned by spouses and not form part of the estate, the spouse simply continues to own the property by right of survivorship.

Whilst the figure is only 4%, this is not a true representation of the situation. With a married couple, on first death, the assets transfer to the spouse IHT free. The 4% figure excludes those who are the first of a married couple to die, whose estate effectively becomes potentially subject to IHT on the second death. Many more people are affected by IHT as beneficiaries.

I’d have guessed around 5%.

Its the double taxation that really gets peoples backs up.

Theres a lot of farmers who are going to have some big issues to face. On the face of it it’ll be cataclysmic for the agricultural industry. There may be some devil in the detail if you can still gift it. That may be no bad thing actually for agriculture as there are too many 60+ farmers who have been told for financial reasons to hang onto the land. However those same 60+ year olds are the ones who will be hit hardest by it I suspect and who have worked 70 hour weeks all their lives to hang onto their farm.

interesting point about moving the land into a company. Often farms are run as partnerships/companies but the land is owned by individuals and it’s always been that way to avoid IHT. It would mean the farms fall under BPR not APR so they would still be caught. Also means corporation tax instead of personal tax which for many farmers is higher

I did know this but only because we've recently been through the probate process. Before that, we'd just assumed that (a) the threshold was lower and (b) the house would have to be sold to pay for care anyway.

But MIL's rather sudden death means DH and sisters are coming into around £250k each, tax-free, and I haven't got my head round it at all. Massively grateful, but it's weird. (Mine is more the sort of family that sold the furniture to pay for the funeral.)

But most people haven't already been taxed on it. The vast vast majority of properties (which is one of the main drivers) increase in value; someone who bought a house for say £120k can quite easily have that house rise in value quite considerably- say to £300k. That £180k hasn't been taxed, has it? It isn't really earned either, it's buying an asset which you invariably also live in and utilising it whilst it rises in value due to external factors.

A fairer way to do it would be to tax the gain I think

If so then the threshold should decrease, would stop people moaning about being double taxed when they haven't though!

It's because the deceased estate has already been taxed (before it became part of their estate) whilst they were alive. And it isn't the only tax applied either - the beneficieries still pay income tax from the estate they inherit. So it's multiple taxation on the same asset.

If people were keen to pass on wealth to the next generation they should do it while they're still alive.
Most "children" inheriting these days are already retired, as more people live into their 80s and 90s who married and reproduced younger than current generations.
People in their 60s and 70s don't need "setting up" and should really have their own homes by that point.
The whole ethos of passing on your family home to set the younger generation up was from an era when people typically died in their 50s and 60s, leaving homes to their working age children with young families.
It makes less sense getting a house when you're about to retire yourself.
Perhaps financial institutions could soften the blow with probate mortgages to cover the period between when the tax is due and when you can raise a mortgage on the house.
With at least £1 million equity a small mortgage shouldn't be a problem, and inheritors could sell their existing home and move into the family home.

That figure isn't the percentage of estates that would pay IHT. It is the figure of people who pay it. There's a big difference.

Maybe people should be more pissed off that King Charles got his £500 million inheritance tax free!

And it isn't the only tax applied either - the beneficieries still pay income tax from the estate they inherit.

What do you mean? If you inherit £50k, you don't pay income tax on it.

Agree too. I’m in the SE and I know hardly anyone who hasn’t bought their house using some kind of inheritance from grandparents or parents. Without it most people would not have been able to have moved out of their parents home and would be stuck there in their 30s or older. It’s simply enables them to buy a normal sized home. Not inherit millions and off shopping all day or something!

I find it hard to believe that only 4% of people have estates over the current threshold. It's really not that high when you factor in how high house prices are now.

How many times can the government tax the same pound? Have you ever thought about it

That percentage will change now inherited pensions and death in service benefits are included. And obviously there are few farms under £1 million so most farms are included and any businesses over £1 million. It will be interesting to see the how the figures change in the next few years.

And as mentioned above, if you are single with no kids for example you only have a nil rate band of £325,000.

@InMySpareTime
I agree, the hoarding of wealth until you die is pointless, I'd rather help my family out whilst I'm here and they are young enough to benefit from it.
Elderly relative died at 95, lived like a pauper, had over £100k in cash!!! never went on holiday, had 60 yr old carpets, no joy from the money he hoarded, would have seen his family freeze than part with a penny.

They don't! The 4% figure is those who pay. It doesn't include passing to spouse and of course people use schemes to avoid it, as they are entitled to do and as we are beginning to do.

My PILS don't intend their estate to pay a penny in IHT, despite being worth 2 million, so we will do everything we can and take advice to avoid it.

The amount more they get paid is sometimes a couple of grand. Which doesn’t even touch the sides when it comes to house prices. For example teachers wages. There is only London and outer London weighting. There is no SE weighting. And an extra few K won’t help you buy a house costing hundred of thousands more.

I will probably have to pay inheritance tax as my mum has a house in London, but they bought for £85k, sold for half a mil and moved mortgage free to a smaller house which is probably now worth more than that. But the inheritance tax threshold is only on money over £1m. That is a hell of a lot of free money before we will have to pay IHT. Actually it will all go straight to our children, because they will never be able to buy a home in the SE, where they were born, and where I was born. People who are inheriting over £1m or even over £375k really should just think about how lucky they are. If it has to go on care home fees, then thats fine too. Taxpayers, including the poorest and people without their own homes who for example have been renting all their lives shouldn't be paying for other people to keep all their inheritance, especially when its over £1m!

My PILS don't intend their estate to pay a penny in IHT, despite being worth 2 million, so we will do everything we can and take advice to avoid it.
why do you think this is acceptable?