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.

Who says they've worked? A lot of it could be unearned income and the beneficiaries may not have worked either.

If you don't want to pay IHT spend your money before you die.

There should be exceptions for sudden deaths of breadwinners so that kids don't have the money taken away from them that will support their childhoods but once you've retired, get spending. And downsizing. And if you don't want to do that, don't then moan if you are on your deathbed and the government's going to get 40% of your house (and it won't even get that if it is going to direct descendents).

If people get ill they have to pay for their care and they hardly get anything left over. I'd rather have enough left to pay IHT.

It's not like the allowance isn't generous either.

Would anybody like me to post their next thread for them, to save them doing it for themselves?

My DF was a retired postman who lived on a State pension and a GPO pension.
He owned a 2 bed flat in South London and when he died, his estate came under the IHT limit by FIVE POUNDS!

YABU. This would affect most home owners in London while the very rich who you somehow think would be caught, would have taken the necessary steps to avoid IHT entirely.

It's an idiotic idea.

To go where? Which country wants people aged 60+ unless they are multi millionaires who sign contracts saying they aren’t entitled to any healthcare?

The wanted people are educated/specialist working age people.

So eould you be ok with regional collection and dispersion then? Southern tax for Southern hospitals? They will pay higher rates, after all. Northern hospitals on Northern land will cost less and need less money.

It's so insulting to imply that southerners are wealthy when a lot of us live in shitty seasonal seaside towns with high housing costs and low salaries.

Well you could not be more wrong.

People talk about the costs associated with living in the South, like somehow you were dragged there kicking and screaming and forced to stay.

I grew up in Teesside, I now live in Cheshire. There is a huge cost of living difference. I bought my first house for £155k in 2018, that wouldn’t get me anything here. Nothing I could fit my family into anyway. Perhaps a shed.

Nobody made me move somewhere more expensive, and I’m aware enough of the COL difference in the South/South East to know that that’s worse still, and for that reason - I’m not living there.

We can’t decide what taxation of wealth looks like based on whether it’s more unfair for people who live somewhere else in the country. Leave, if you don’t want to deal with the cost of living there.

People who own property and live in those areas have more, that’s how they live there. If that means they pay more IHT? Good. They have more available, or they wouldn’t be able to own a £1m+ property in Surrey.

Paying peoples wages isn't my responsibility. Im not a charity.

I don't have a moral duty to get my nails done to prop up the economy.

How about people stop being so f””””” entitled to other people’s money? And make decision for your life based on YOUR OWN MONEY

I was just using the terminology used by HMRC.

We already have rules on gifts (i.e. annual and small gift exemptions). As such, I don’t see how it would become harder or more expensive to administer than what we have today.

I am struggling to understand why you think this is so radical or indeed why being radical is a bad thing.

The South is a little bigger than Surrey.

I think more people would support the idea if they understand that only 4 per cent of estates were affected by it.

Where would you prefer it to be squeezed from?

It was an example.

If the government only ever does what’s popular, rather than what’s right, this country will eventually go bankrupt.

We should do both - increase IHT and tackle tax avoidance. They’re not mutually exclusive.

It will change in 2027 with the addition of pension funds.

Over three years it will raise about enough to pay a weeks worth of interest on government borrowing.

The government says there an estimated 213,000 estates per year with inherited pension wealth. That’s a much larger number than the number of estates currently liable for IHT (27,800 taxpaying IHT estates in 2021-22, estimated to rise to 37,000 by 2016-27.)

Most estates will continue to have no Inheritance Tax liability following these changes. The government estimates that, out of around 213,000 estates with inheritable pension wealth in 2027 to 2028, 10,500 estates — or around 1.5% of total UK deaths — will become liable for Inheritance Tax where this would not previously have been the case. Around 38,500 estates will pay more Inheritance Tax than would previously have been the case. These figures do not take into account potential behavioural changes following the announcement of this measure, and as such should be viewed as an upper limit.

Perhaps they could go after the criminal gangs and money launderers instead of constantly fleecing the legitimate citizens who try their best to be self sufficient and save and have the audacity to own a modest property

I think this would be even more unpopular -and it would not reduce inequality.

I think more people would support the idea if they understand that only 4 per cent of estates were affected by it.

Is that really true? I thought inheritance tax had to be paid on anything above £350k. Most houses are worth more than that now, especially in the south. So a large number of people are going to end up having to pay inheritance tax. The problem is that when someone dies, their estate is frozen. The person inheriting can't access the money until they've paid the inheritance tax. They may end up paying it out of their own pockets, suddenly finding themselves in a situation where they have to produce a large sum - say,£70k. The tax is 40% on any amount left over £350k.

It's used by HMRC to describe gifts within 7 years of death that are subject to IHT. You are using it meaning the exact opposite - ie gifts more than 7 years before death that are not subject to IHT.

It would be a fundamental change because at the moment (leaving aside trusts) the whole system is geared up around taxing people who have died after they have died on the value of their estate immediately before they died and on transfers they have made within the last 7 years. It wouldn't be impossible to make such a change but it would be a very radical change with increased administrative costs and be harder to police. To be effective, you'd probably need to switch to taxing all lifetime transfers upon the transfer in the same way lifetime transfers to trusts are taxed.

I'm not suggesting that radical change is wrong - I am just saying that it is completely and utterly wrong to describe such a change as closing a loophole.

As explained upthread, it's £1m before any tax is due for a married/civil partnershipped couple who are leaving their home to their children/grandchildren.

What is the case for adult children who inherit from parents? Don't the children have to pay tax on inheritance over £350k?

Are there any government or other legal links explaining this?

People are only going to vote for them againif the economy starts growing and they start feeling better off. Labour need to raise money somehow and increasing IHT would cause less damage to the economy than other options.

The problem is the squeezing is announced at the same time as yet another splurge on something completely optional.

The IHT tax which will be severely detrimental to family farms will raise about 500 million from the children of farmers who try to stay in farming.

Literally the week after Reeves announced it Lammy donated 500 million to African farmers.