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.

But I also disagree that earnings or income are directly proportionate to how hard you work.

Some people earn a lot and it’s sheer luck.

Who is going to tell a nurse who works full time for the NHS that she’s not earning billions a year because she doesn’t work hard enough?

Thats the logical conclusion of your argument, here.

Sorry, how is me giving my child a house and spaffing my leftover cash on foreign holidays before returning to the UK to get free NHS and social care going to stimulate the economy?

Am I missing something? 👀😆

If you're serious, I would quite literally rather burn my money and go to prison for tax dodging than donate it to this failing country.

I understand that, but if it’s in your pension pot it hasn’t been taxed, so in future IHT will be paid when you die. If you draw it down, it’s taxed and then you spend it. Either way you’d only be taxed once at the point that money leaves your pot.

You could argue that depending on what you did with the money next, it would be liable for tax; but contrary to popular belief, all money is taxed repeatedly not just once.

I'm confused.

Mr and Mrs Blogs have a combined threshold of 650, so only 350 is taxable at 40 percent, and if it's 350 in pension funds it is also subject to income tax on the remaining 210 as an additional charge to the two kids.140 plus 82 so total 22 percent tax.

You are suggesting that that goes away and it's all taxed as IHT (400) and income tax on the 600 (another 340)? So inheritance after tax of 170 each from the 500 each?

That's 74 percent tax?

Can you explain the maths? I could be miles off.

think it’s worth looking at. In the last 10 years the value of property held by people over 61 has grown by £1.1trillion. That’s not been earned through hard work but gained by being on the property ladder at the right time. Taxing that more after people have died seems fair to me given the need to raise funds from somewhere.

"redistribute wealth thus reducing inequality"
Yes please.

The tax paid on the drawdown over 25 years will far exceed the deferred tax in the previous years.

The whole point in saving is growth and therefore the growth will benefit the state too.

Yes at the point of transfer it's a PET because you don't know when the transferor will die. If the transferor dies with 7 years it remains a PET and is taxed, if they survive 7 years it becomes an exempt transfer and is not taxed.

PETs are taxed as otherwise everyone would just transfer everything on their deathbed.

So if you're saying that you want to remove the exemption for transfers which took place more than 7 years before death you will have a tax that applies throughout everyone's lifetime on all relevant transfers. Want to give your kids some money to help them buy a house many years before you die? It would be taxed. Some people might like that but others would hate it and it would be much harder and more expensive to administer.

It could be done but would be a radical change to the nature of the tax and like it or not it's ridiculous to suggest it's "closing a loophole".

It penalises you for having a saving mindset.

If you buy assets that accumulate in value, you get taxed. Spaff it on disposables like, holidays, luxury goods... have at it! Spend your money! No double tax for you!

I’m pretty sure we could fund things if everyone paid what they should. I’m a landlord, whenever a tradesmen works on my home he asks if I want the invoice to one of my rental properties. No I don’t.

Well then you're penalising families with 1 child vs two or three.

Why should my 200k by taxed because I budgeted for one child and your 200k be exempt because you had two?

Only a few years ago, there were threads where multiple people Saif they would be happier to pay more tax (not IHT but NI) for better services.

Where are the better services?

Oh look another goady thread where the OP posts a ridiculous op then disappears

It’s not even double tax, it’s more like quadruple or more tax, because they keep taking bites of the same original chunk of money.

400 billion pounds worth of social housing in London is occupied by foreign households.

So no thanks, I'm not interested in the government taking money from my sons to provide someone moving here from another country a house.

The social contract has been broken in this open border economy.

Those joining the economy now can pay for themselves or those of you that want to can pay for them.

If it's roughly the same, the why do it?

I think that's just what we are told to make us think that they are not so different, and not paying less than their share.

But actually most people's wealth is tied up in houses and in any event you're looking at 14 years before being entirely free of the PET (7 year long shadow...not just 7 years as a lot of people think)

To avoid a functioning estate being broken up on death.

Which is what this government have just done to farmers by the way.

LOL no!

Well my parents worked hard too but I grew up in poor town in the North and our family home, even thought it was in a nicer part of town, is going to be worth around £200k max - plus most of it will go on care fees anyway.

I work my socks off and am very much a net contributor, so it feels unfair that peers who today work part time, if that will receive the best part of a million for having parents who lived in the right bit of the country.

I don't see an issue, frankly, with asking wealthy southerners to share their housing windfall to subsidise the schools and hospitals, we all use and even things out a bit.

I hope to be able to leave my DC something but I won't mind if a good chunk if it went in IHT if I was fortunate enough to save anything like that.

That probably won't be an issue though. Currently IHT is only paid on the bit of your estate over £325k. However most people with estates of up to £1m (if most of that is housing) will be able to avoid the tax, due to the various allowances between spouses and breaks for main homes etc.

@Pictishblue My post wasn't trying to represent actual tax thresholds so don't bother doing the maths! I was just thinking about why so many people feel it's outrageous to tax people's unearned income when it comes in the form of inheritance, and wondering whether it's because they see it from the perspective of the person wanting to pass on their money and not from the perspective of people receiving a windfall.

Inheritance tax is not going to make rent or energy more affordable. It won't protect individuals from greedy corporations or shareholders.

Dear God OP can you please clarify that your proposed IHT increase from 40% to 50% also includes the existing thresholds as many pps here are going bog-eyed at the thought of any inheritance received or given is taxed at 50% with a zero threshold.

It makes a difference to my vote - no thresholds and an IHT rate of 50% YABU, retain the existing thresholds of £325k/£650k and increase IHT to 50% YANBU.

Following the changes Rachel Reeves announced in March, our daughters will have to pay both inheritance tax and income tax on their dad’s pension pot. Before March, they would only have had to pay inheritance tax.

Presuming that they’ll both be at least in the 40% tax band by that point, that means his £1 million pension pot will be taxed at 40% twice. So rather than getting £300,000 each, they’ll only get £180,000.

We are not necessarily wealthy, the houses are so expensive