Labour should increase inheritance tax to 50 per cent

[Tummyachey]

If they did this it would raise billions of pounds - while avoiding raising taxes on working people. Exemptions should be put in place to protect small businesses; I accept this would be complicated, but they need to try and make it work.
So much money could be raised and it would also encourage earlier wealth transfers which would stimulate the economy. In addition, it would help redistribute wealth thus reducing inequality.
There would be political backlash, of course, but they need to get the economy growing and should act now so that the results are visible in time for the next general election.

Ok, so I earn money and pay tax on that money.

Whatever is left after tax, I use to buy a house and pay SDLT, buy clothes etc and pay VAT.

Whatever’s left after that I save or invest, and pay income tax or capital gains tax on any profits.

Whatever I’m left with after all that, after the government has taken multiple bites of the cherry, I leave to my kids and the government takes 50percent of that?

What has been my actual tax rate on the money I earnt, when all those different tax hits are taken into account?

Nah, fuck off. If you raise the tax burden too high then wealthy people just leave, and you lose all of their taxes plus everything they spend on goods and services. It’s stupid and short sighted.

Presumably you mean exempt transfers? It's only a PET if the transferor dies within 7 years, after that it is just an exempt transfer.

And I wouldn't call that a loophole in any event. It's a cornerstone of the way IHT works. If you want to tax transfers made at any point during someone's lifetime then you would be fundamentally altering the way IHT works.

Nope. Don’t agree at all.

first and foremost the party that abolishes rollover relief will get my vote. That’s an intrinsic problem to the cost of housing. Utterly ridiculous they left that alone whilst hammering farmers.

I think pensions should be exempt from IHT and I think families should be encouraged to leave money and build wealth for their future generations.

What loopholes are these?

Trusts have been subject to IHT for years.

As I understand it if he is passing his house to his dc or dgc there is a cap on the IHT plus the 325k which doubles if a spouse predeceased him and they left him their estate. This can make the estate worth nearly a million before IHT is paid.

Can't remember the full details.

Exactly - when my dad earned £1, he paid (on average) 50% tax on it, so kept 50p…then we paid another 40% tax on that 50p when he died, ie another 20p. So at the end, his family were left with 30p from the £1 he worked bloody hard for, whilst the government took 70p in tax. I think that’s enough, don’t you?

Exemptions should be put in place to protect small businesses;

Why?

If you're going to raise taxes, there should be no 'get out clauses' at all. There should also be taxes on Trusts (yes I'm looking at you Hugh!!)

Duke of Westminster avoids huge inheritance tax bill using legal loophole
Hugh Grosvenor was the 68th richest person in the world when his father died in 2016 and he inherited his £9billion fortune

But the then 25-year-old Duke was able to keep all of his father's estate worth an estimated £9billion, thanks to an inheritance tax rule which meant he didn't have to hand over a huge wad to the government's coffers.

Tax avoidance is the route to go down. Let’s pursue those who are actively avoiding tax. More trickier to catch but potentially a lot more to be gained there than increasing IHT.

Plenty of businesses as well as individuals. The inland revenue should be working more closely with banks to id these individuals.

The problem with pensions not being subject to IHT is that wealthy people could just stick loads of money in a pension, fund their retirement using other wealth whilst leaving their pension pot untouched, and pass it on without paying any IHT. It's not really what pensions were intended for.

Have you had legal advice - does he have a wife or children who have inherited ?IHT threshold can potentially rise considerably if so …

There should also be taxes on Trusts (yes I'm looking at you Hugh!!)

There (generally) are…

In the spirit of raising taxes, im always intrigued if having a much smaller amount paid on a bigger number of estates would raise more. Like if everyone paid 5% of anything, rather than only 4% paying 40% over the threshold

He wasn't married. He had no children. No allowance for passing it to young nephews and nieces.

It's a trust so they pay 6% every 10 years rather than 40% on a death. It works out roughly the same in most cases.

www.grosvenor.com/about-us/how-we-work/tax-policy/the-facts-about-our-ownership

Labour are very good at taking people's money. That's why I for one won't be voting for them again.

Of course. Not married, and no children. Single people who have actually been quite poor all their life shouldn't be paying this tax. He has left the money to young family members, but it does incur significant tax.

I didn't mind paying a bit of IHT on DM's estate and wouldn't have minded paying a bit more as the thesholds for IHT are quite high anyway. She had been a teacher and benefitted from the vast increase in her property's value and subsequent rental income after she moved in with her DH. I hadn't earned a penny of my inheritance so paying some tax on unearned income was fine with me. After all it's tax that paid her wages and contributed to her pension and her comfortable lifestyle. She was also good with money and invested well.

My dsis's were not so pleased about it and went to ridulous lengths to try and lower it - bare faced lying, stuffing as much jewellry in their pockets as they could when her DH wasn't looking, etc. The funniest one was telling the TPS that she wasn't married to try and get a small payment instead of her dear DH who was rapidly succumbing to Alzheimers and needed some help towards his care fees. I ensured the truth was told about that.

Oddly enough both of my dsis's were also paid by the public purse at the time yet were unable to equate their wages and pension contributions to the need for taxation to pay it.

Tax is tax and pays for a lot of things and IHT is one of the least painful taxes to most people (excluding farmers and the landed gentry).

But if you died then your children, especially if they were young, would have a much greater need of the money wouldn't they?

Isn't it right that parents get a more generous allowance to pass onto their children and grandchildren?

An excellent idea.

Of course, one does not have to pay it oneself! (guffaw, guffaw)

Sir John Major saw to that, for which I thank him. (Doffs Crown)

I’m quite pro that and I am going to pay a ton of it. With a bit of luck it would encourage my parents to actually spend some money on “nice things” for them. They are still making sure that they are saving apparently. They are in their 70s and my dad has cancer. WTF they are saving for I don’t know.

I get that they like the idea of leaving money to me and my brother but we are two highly functional, decently earning adults in our 40s. (At least partially due to the high IQs they passed on and the functional childhood they gave us.) I just want them to have a really lovely holiday when my dad finishes his treatment.

Errr…. Ummmm. No

I can see from this thread inheritance tax is one of those things that makes it suddenly OK to be a Tory.

Here's the lowdown.

People accumulated too much wealth by the country borrowing to fund services rather than raising it by taxation.

Now we are stuck because we can't borrow any more money.

So a choice. We can either fund services off the back of current workers by raising their tax. Or we can fund it off the back of previous workers who didn't pay enough. Or we can have crap(er) services.

My guess is it will be a mix of all three. But the second has richer cohorts and is probably fairer area to target in terms of raising money.

That’s not a loophole. It’s a statutory relief.

Er no. It's not fair. It's beneficial to their children. But it's not fair. And it's not even meant to be. Or else it would peter out when the children came of age.

So I work all my life, pay my taxes and and leave a nice house in my Will, 50% split between my kids and the government? Yeah, I’ll pass!