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.

When I die, I imagine I either will no longer exist, or won't GAF about $ anymore.

My DC have the advantages of having parents who can afford extra curricular, days out, decent food, sports, holidays, stable housing, etc etc etc. When older, university, potentially a deposit for property, absent guarantor, etc.

Should they really get more advantages from a big inheritance?

Why should they financially suffer if I need a care home later? Or gain by discouraging me to access adequate care when I'm 90?

There is something very unfair in inheritance. I will inherit from my parents, whilst DH financially contributes to his parents. Neither of us are better than the other.

But you do get taxed double - first income tax and then VAT when you spend it. And while it's sensible to ensure you have savings, spending money does keep the economy going and pays people's wages.

It's 650, not a million.

Do our kids have to move up North to even things out a bit too when we die? Leave the place they grew up in?

The housing cost for them staying in their own environment means they would have to if we do what you suggest.

I've just watched the threads on an employment tribunal case in Fife where the public sector has spent 250,000 on lawyers defending stupidity.

So no thanks. A lifetime of work and saving, 250 IHT and boom, lawyers get the lot for arguing stupid.

The waste is staggering. The public sector has absolutely no concept of value or worth.

30 years of economic chaos.

But those “wealthy southerners”’ kids will need those “housing windfalls” to pay their housing deposits to continue living in the south. It’s not like much of the money is kept as liquid cash for very long. Unless you want them all to move north and use what’s left of their inheritance to displace your kids from the local housing market?

I think rather than permanently increase IHT, there could be a one-off modest increase for those aged 60 plus today. Not because I believe in IHT, I don’t because the money was already taxed once and people save for their families to benefit.

However, I think many of this particular cohort are sitting on the largest amount of dormant cash in history and what I think it would do is incentivise many of them to spend big. Most people would rather enjoy their money than have it go to the government when they die.

This would unlock a shit load of money into the real economy, generating growth rather than going to the government to waste.

Wait I’m lost, why would your brother have to pay it with a small estate but not you with a large one?

No it is a million in most cases for a couple who are leaving their house to their children/grandchildren. So many people have not heard of the residence nil rate band.

(NRB @ £325k + RNRB @ £175k) x 2 = £1m

What like an apple?

My savings aren't a tree for anyone to eat the fecking fruit off.

Sorry, got that the wrong way round - pre-March, pension pots were subject to income tax but not inheritance tax. Now they are subject to both.

Taxed on earning
Taxed on saving
Taxed on spending
Taxed on dying

not really an incentive to work hard and provide for yourself is it?

My parents were taxed on earnings, savings, spending, paid their own care fees, supported their children, gave to charity, volunteered, and still paid £500k in IHT.

Increasing IHT will reduce saving and reduce assets to pay for care. The behavioural nudge is in the wrong direction

@Tummyachey the only ones who manage to avoid it are the millionaires who have financial advisors at every turn. the man in the street cannot afford an advisor to take care of everything. why should people who have worked and saved really hard all their lives be penalised even more just to make sure that the generations of perpetually unemployed can remain on lifelong benefits?????

Because he is one person and was not leaving his house to children/grandchildren so only gets the nil rate band of £325k and has to pay tax over that.

Whereas a couple who are married/in a civil partnership get £325k each and if they are passing on their home to their children/hmgrandchildren they get an extra £175k residence nil rate band each - so it's £1m total tax-free.

Ah sorry, I'm not married so I hadn't taken that into account.

No worries - just trying to clear things up as IHT is so confusing!

And for those who are not married but leaving a home to children/grandchildren they still get the RNRB, so £500k.

I have worked my butt off since the age of 18. I will do everything I can to avoid this tax.

Quietly, because they don't want to sound grabby, a lot of actual farmers are quite happy about the new rules for them.
We know more than one situation where the owner is in his 80s and although the farming is absolutely being done by his son and dil, he still hasn't handed. It over.
The new rules mean at least conversations and even action might happen to pass on farms before the parent dies almost at the same point the child would retire.

Well I had to move South to get a decent job and good opportunities - so yes why not? Then perhaps we'd have a more even economy

Or we will just leave.

Research has shown exactly this. Currently the very wealthy avoid IHT by giving away virtually all of their assets when middle aged. Those with more modest wealth need their assets to live off so can’t do this and are caught by IHT. Drop it to 5% and the very wealthy are much more likely to just stump up and you’d get lots more tax take.

But since when did the government listen to their actual tax advisory board members such as Dan Niedle?

Right so this is a bit of a merry-go-round isn't it.

My kids have to leave their good jobs, go up north, earn less so that my money can be spent on housing for other people in the south.

Is this a circular plan or is there a further North their children can go to?

We already have majority non working and low income people occupying central London boroughs, whilst the higher earners commute in in order to afford a bedroom for a child, so this is already happening in the south.

But yeah, my money can pay for more houses in the south for people that aren't my family, they have to go up north.

Socialism.

raizing the tax by 10% would raise 1-2bn. So 0.1% of tax revenue. So no it wouldn’t make much of a difference

I agree with this. Younger people today with expensive homes will have had to pay top dollar for them but will have minimal unearned equity from growth.
I think it we could tax at 50 or 60% anything over the first 500k of house price growth. So on a house worth £1m that was bought for £100k - would pay £200k of IHT. There could be some deductions for improvements etc

I propose the IHT increase to retain the existing thresholds, sorry if that wasn’t clear!

That’s 5% on all estates, no nil rate band or exemptions at all btw. Fair? I think so.

In short...
Because the threshold is 325 k for a single person.
Double that for a married person plus the value of the house if left to an offspring.