Inheritance Tax

[Annabella92]

Is it wrong to try and avoid inheritance tax? Is inheritance tax itself unfair? Has your family taken any measures to avoid it?

Inheritance tax is the fairest of all the main taxes IMO and if anything should be increased

The people who inherit did not earn that money in any way, nor did they pay tax on it. And people who inherit a substantial amount (which you need to for IHT to kick in) have probably had a financially privileged life already.

£100 taxed at 40% = £60 left
That £60 taxed at 40% = £36

So it's not 80% in total at all. Two 40% taxes on one sum mean 64% of the initial sum goes to tax.

Still high but let's keep the maths true.

If you want to tax the increase in property value charge 40% of the increase in value every time someone sells a house, that would sort it out and raise much more money.

You have to pay a 10 year anniversary IHT charge on trust assets.

The trick with property could be to downsize early and give away the difference.

Apart from completely stalling the housing market.

It's not ethically wrong to do what is legal to minimise your tax exposure.
However, you really will be actually dead by the time any inheritance tax is due. The tax applies after you have finished with the money because you are dead, and before your legatees recieve anything, so no one alive loses a penny.
The idea that it is unfair for the "same money to be taxed twice" makes you sound eye-swirlingly bonkers. All money is taxed numerous times. I buy a thing for £125 and £25 of that goes to the government as VAT and the rest goes to the business owner. They pay 20% tax on their profits and then pay their workers or pay their shareholders dividends, who then pay income tax on the money that they receive which has already been taxed, and then they spend their money on items that attract VAT even though they have already paid tax. The same money gets taxed whenever it changes hands, that is the nature of all taxes, and IHT is so incredibly lenient (only 4% of estates pay a penny, most people are exempt) that it's really not the appropriate target for your angst. If you are in the frame for your estate possibly needing to pay any IHT then your legatees are already in line to receive a life-changing amount of money that the vast majority of the population can never dream of. Taking a small slice to spread the benefit to those who aren't so lucky is a small price to pay for living in a civilised country where the rich and strong are discouraged from actively stamping on the faces of the less-fortunate.

You forgot the interest on the 60% left which is taxed at 40% and then taxed again at 40% as well, the maths are not that simple.

The threshold is roughly £1m when taking into account a couple's assets. You get £1M tax free - and then you quibble about paying tax on the rest? What kind of society are we living in with this greedy I'm alright Jack attitude? Where's the sense of responsibility and duty to our country? Where's the compassion? Personally, I think wills and inheritence cause so much rancour within families, and so it would be better if, when you died, everything went to the state. No arguments or falling out between siblings, exes etc...

we’re in a situation where those who inherit will be ok and those that will not will not. Inherited wealth (either from a living or deceased benefactor) will soon be the ONLY way to buy a house. Totally unfair to those without someone able to gift to them. IHT is fair.

Hear hear

Especially the point about being taxed twice.
If people were really bothered about being taxed twice then VAT would be a much more sensible target for their ire.

And also the point about this being a tax that affects only the most privileged top % of people. Tiny violins all round.

We are one generation away from a huge split in society: group 1 being those whose parents saved money and bought a house, group 2 being those who didn't.

What the offspring actually do with their lives will largely be irrelevant, a not-inconsiderable percentage of people will basically be given a several-hundred grand payday in the next 10-15 years based purely on their parents financial decisions in the 1980's and 90's. And they'll get it totally tax free up to £1m. And people are still complaining, it's crazy!

We've never had such a "problem" before, where the amounts in play are normalised. Even 20 years ago inheriting £1m was not an issue many people would have had, but now almost anyone with a decent pension and/or a house south of Watford is worrying about inheritance tax.

I personally think that some sort of inheritance tax is fair enough, but they should significantly lower the percentage and also lower the point at which it kicks in - 40% is too high and gets people's back up even if it's only for £1m+. If everyone knew it was, say, 10% over £500k I think it would be less of something to protest about. 40% just seems punitive.

I think it’s unfair. People have already paid tax on their income. This is how they’re rewarded for saving their money with a view to supporting their children.

I don't agree with inheritance

You don't hit inheritance tax until you hit 1 million in most cases. So not as a child of the working class.

Now even with properties going through the roof I doubt the adverage person gets much that much change from wrapping up an estate. But maybe I'm nieve.

I'd rather buy my myself all the help I could buy in my damage than pay tax. No one likes tax surely

IHT is mostly paid because of property, I suspect very few people have hundreds of thousands in savings.

It depends how you feel about a society where your life prospects are dictated in part by your parents' wealth.

Currently it's only around 4% of the most wealthy affected, people are getting worried about something they will never have to deal with. Same as the hysteria about farms.

If you are paying inheritance tax, it's because you are inheriting an enormous amount of money you have not earned.

What difference does it make?

Both lots of our parents have downsized and, as we said to them, spend all your money! It's yours! We don't expect to inherit!

I'd rather they enjoyed the money (and they are).

People are constantly complaining about services, but no one wants to pay tax to fund them. IHT on the increase in value on a property (not paid for by the owner) sounds reasonable, especially if it's only for estates of a higher value. You get to pay capital gains on shares and 2nd homes, so fair enough paying IHT on the gain in value on a property.

Farms are different, and this policy will massively affect food security.

Worth pointing out that the historic "only 4% pay it" will massively change going forward due to:

• house prices
• pensions now being taxable (before 2015 once you died you lost all your pension money, since then it's been allowed to pass tax free assuming certain criteria are met, after 2027 it's taxable as part of the estate just like savings)
• stocks and shares ISA's and other savings products making it easier for the average person to 'play' the stock market

So the £1m limit is definitely something that is suddenly 'in view' for a lot more people.

Still doesn't change my view that IHT is a perfectly fair thing to charge for a functioning society, I just think it needs to be framed differently nowadays - as it becomes more normal the percentages and limits should come down to get people more accepting of paying it rather than trying desperately to avoid it.

Avoidance is practically encouraged. It's much better for society and the economy for the older generation to be giving their wealth away to people who can use than keeping it in their bank accounts, much better for them to downsize and gift what's left than to sit around in big houses while younger people suffer a housing crisis.

Lazy journalism at its laziest....

It cost my cousin a lot of money to get out of a trust that her parents had set up. She said the only people who benefitted were the solicitor and the bank

News flash: they can use that money to support their children now. It will probably be more useful to them while they're still younger than at a random point in the future when they're probably in late middle age themselves at least.