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.

The people I know with severe anxiety are not on benefits but can often be unable to work and are signed off sick, the support just isn’t there unfortunately.

Punish those who have worked hard their entire lives to provide for future generations. Gotcha.

Me, me, me.

Have you ever used public services of any kind including the NHS? Do you expect roads to be fixed and parks to be built im your area?

Labour have just increased IHT by pulling pension funds into scope. It was already taxable as income to the recipient and now they are taking 40% off upfront too. So the majority of any leftover pension savings will be spent on the never ending list of things the public sector demand.

I imagine it's tipped a lot of people into retirement elsewhere. I'm going in a few months.

It's really hard to save enough for an unpredictable retirement length and so saving hard to look after yourself and family is now just another pocket to pick.

Like other posters I'm fed up of the wasteful public spending. The country is a leaky sieve. I would rather pay tax in a less wasteful country that lets my family keep my savings.

What tax should we raise instead? Public services are on the floor.

I don't like inheritance tax but I like the thought of paying more income tax so Hugo amd Henrietta can inherit £1milliom each tax free even less!

I find it really weird how unpopular inheritance tax is, when for almost everyone who dies (96% of us) our estates fall under the threshold so don't pay any inheritance tax, and as a general principle 'the rich should pay more tax as they can afford it' seems pretty sensible?

I wonder if it would be more accepted if hypothetically the thresholds were for the inheritee - for example if the rule was that no one can have an inheritance windfall of more than £100,000 before they started paying tax on it. I have no idea if that would bring in more revenue, but just thinking about the framing of it. All these people who'd get up in arms about poor Joe Bloggs who worked so hard all his life to leave his £1 million legacy to his kids only to have the state snatch some of it away. But would they be so fierce in defending the rights of his two adult offspring to inherit £500,000 each tax free (which they haven't personally raised a finger to earn). Just pondering.

Inheritance tax raises 6bn a year. Increasing the rate from 40% to 50% will raise £1.5 billion a year. It is a bad signal and raises very little.

Instead, start with ...
deport illegal immigrants.
deport foreign criminals and bar them from re-entry.
stop benefits to foreigners.
stop free NHS care to foreigners.
...

I'd be for raising the minimum threshold, so average family houses (in expensive areas) were below the threshold, then I think it would be fair to raise the %.
So maybe £500 000 exempt then 50%. I am not sure if that would raise more or less money though.
I don't think that most people with estates to leave worked any harder than many who are under the current threshold.

More revenue will be raised if IHT is reduced NOT increased!

At a whopping 40%, people are incentivised to take steps to avoid it via lifetime gifts, trusts, etc. If it were lower, people wouldn't feel they had to spend tens of thousands of pounds in specialist advice to reduce it.

I'd go the opposite way, drastically reduce the threshold to something like £100k and charge a flat 10% on the excess. That way, there'd be little incentive for people to pay tens of thousands for avoidance schemes.

This pretty much sums up my opinion OP

Tackling the black economy would raise tens of billions more than piddling around with inheritance tax.

Yes, well said.

Why will your partner’s pension pot be taxed twice? I don’t understand.

You've obviously never had anxiety then. Lucky you.

All your hard work? No property benefitting from 30 years of outstanding inflation? Good on you if thats the case, by the way

But people can already pass on £500k tax free if they are leaving their home to their children/grandchildren, and £1m for couples.

That's why it is only a small percentage of estates that pay IHT.

The argument seems to be that the people who inherit haven't earnt the money through 'hard graft' but through 'luck' - although arguably luck is at least partly linked to smart choices, taking risks etc. Those who take risks and win money via lottery, other gambling etc are seen as lucky and not asked to give up a proportion of their winnings for the 'greater good', despite not having earnt it. Those who take risks in business and then have them pay off, do have to give a proportion up in taxes etc.

Take money off people who haven't earned it to....give it to people who haven't earnt it. Hmm, that seems entirely logical

I think IHT is great if the Government is spending it properly on infrastructure and NHS. EVERYTHING is badly managed and billions wasted.

IHT will apply to the value of the pension pot and then when withdrawals are made from the inherited pension pot by the recipient they will have to pay income tax on the withdrawal.

But the deceased partner will have received income tax relief on pension contributions and no tax on growth of the pension pot.

So it's not really double taxation if you take the income tax relief into account.

Because the right wing press keep harping on about it.
Its ridiculous.

People on Mumsnet do like to bang on about 'unearned' money - what do you think working age benefits are? Some countries pay benefits in proportion to what you've contributed- maybe that would be fairer?

No, at the point of transfer it is a PET (If the transferor dies within 7 years it is a failed PET)

This is the terminology used by HMRC and If somebody reading wants to find out more, that is the term they would be wise to Google.

I think most people would call it a loophole even if you don’t.

As for your statement re “fundamentally altering the way IHT works” …. I don’t think anybody developing tax policy cares.

Just a general point about taxation! Going back thousands of years, we’ve always had some form of taxation. In more modern times, at the start workers paid something like 10% of their wages into the general upkeep of the country. Since then it’s morphed into the beast it is today, a huge moneymaking exercise for central government with taxes on income and every single thing we buy and that’s before we get to local council taxes and taxes on fuel, on pensions and yep, even on the things we leave to our kids.

Does big government spend all that money wisely? Of course not. So much of it gets thrown up the wall and when the piles of cash run down, they invent new ways to tax us.

Yes totally agree

This is one of those topics that shows up how people living outside SE and some of the bigger cities just have NO IDEA about property prices. If DH and I both died, we cannot even leave our normal size family home for our young son to live in without IHT being due, which would drain down all extra savings that could orherwise be used to care for him until he's an adult. We are not living in a world where the £175k each you can give for your main residence goes anywhere; you'd struggle to get a one bedroom flat for £350k in this area, never mind keeping his consistent family home for a family member to raise him in.

Go back 10 years and I was happy to pay tax, now - no, I'm getting mighty bored of being one of the few net contributors; we've already had a lot of swipes from employer NI, cost of living increases etc etc; all while all of London gets more and more crowded with endless people who do god knows what, but it doesn't include working on weekdays unless they're cycling pointless deliveries up narrpw pavements. Keep on raising taxes and it will become much easier to retire early to somewhere cheaper, where at least our son would be able to keep his home if the worst happened.