Oh what a surprise - Tories say inheritance tax unfair

[WendyWeber]

BBC

What do they mean, ???

They are a damn sight richer than those who own no property and have no estate at all

yes, I disagree with that statement dadada.
I think it makes much more sense to tax inheritance in preference to PAYE for example, because the latter is related to merit and labour, whereas the former is related to luck.

so if you have a house worth 300k

you have 3 kids - they get a third each minus 40%

but if you own a house worth 290k and one kid

they get 290k

Not IHT over 300K so teh 3 kids woudl get 100k each. If house was 350k 50k at 40% = 20k. Therfore 330000 to be divided between the 3

yep

It's 40% on anything above 300K. Not the 300K. It's not like stamp duty.

In a wholesale reformation of the tax system perhaps HC, but surely in the present system, families are being taxed once on their earnings and again on the only means they have to afford a home.

The children of those who have benefitted from HPI are reliant on the gains made by their parents to have any chance of getting on the housing ladder, particularly in the South East.

I'm all in favour of an inheritance tax, but if it has been set at an equitable level, then that level should remain the same.

BUT the national average house price rise has been steady, and the threshold has gone up in line with that (the threshold is still way above national average price of £210K)

custy, what does the number of children have to do with it?

Gess, your example of your friend who couldn't afford IHT was exactly my point. There are families who inherit homes they are living in and therefore can't pay as they don't have the cash unless they sell the roof from over their head.

The op queried what how these people can't be described as rich when they have assets of over £285k but this is a good example.

My main gripe with this tax, is that in general it is income related. If you have the disposable income to pay a solicitor £500-£1,000 every few years to review things for you then you can pretty much avoid this tax. The people who end up paying it are those who either haven't had the education to realise that they need to do this, or haven't had the money to do so. And yes you can get round it with a deed of variation but again only if your beneficiaries are astute enough to take advice.

And let's face it, Labour haven't exactly grabbed the opportunity to revisit second homes either have they?

The people who end up paying it are those who either haven't had the education to realise that they need to do this, or haven't had the money to do so. Or don't view it as wrong!

Yes, the rich can always find ways of avoiding tax. Doesn't alter the fact that, for most people, 300k is a huge windfall for doing nothing

gess's example wasn't someone who lost her home, though - it was someone who would have liked to move into her parents' home but couldn't afford to pay the inheritance tax without selling. Sentiment aside, she would presumably have benefited financially from that sale enough to buy another house.

We all have to live where we can afford to live, whatever the reasons. When my father died my younger brother was living in the house with him, but for my other brother and me to receive our share (smaller than his) in the estate, the house had to be sold. This was in Middlesex; with his share he bought outright a small house in Lincs, which he lets out while living elsewhere with his partner.

The people I do feel sorry for are elderly couples where one needs nursing home care but the value of their assets means they have to pay so the house has to be sold so the remaining partner has to find somewhere much cheaper to live in order to fund the care. I don't disagree with their having to pay, but it surely ought to be possible to make some sort of legal arrangement to take the costs from the couple's estate, either when both have died or when the remaining partner needs to fund care for him/herself.

Go Nadine!

Unless we die young then its unlikey that our estates will be big enough to attract inheritance tax.

Look at this article.

news.bbc.co.uk/1/hi/england/somerset/6950817.stm

I really feel for the poor farmer. The council is being really unfair.

Sorry my point is that anyone who owns a house, however small has to pay for nursing home care and gets no help from the state.

Again those on benefits don't have to pay a penny of nursing home care.

Ruby-I had exactly the same problem with my Mum's house when she died suddenly.
She paid tax on everythign whilst alive and i really did resent not being able to move in with my dd after she died-I may have been able to manage it without IHT but there was no way otherwise.

If people have worked all their lives to better themselves,paid tax at whatever rate,why should they be taxed when dead?

My Mum was only 60 and lived in a modest house on the South Coast-seh didn't expect to die but also was not savvy enough to even consider plannng to avoid IHT-not even sure she was aware of it tbh.

Have you got siblings whoosh? Were they forcing the sale? Do you rent atm?

We had a really rubbish IHT situation.

FIL owned house - not in joint names as he was....well, ahem, a little old fashioned and not the nicest person I'd ever met.

On his death 50% of house ownership transferred to his wife, 50% split between the children. Wife has life interest in property, so will always live there and proceeds of sale must be used to buy her a new property if she wants to move.

BUT the 50% value was above the threshold - they had lived there 50+ years, put in electricity, extended/improved it etc.

So we got to pay IHT on a propery we will not be able to realise capital from until after MIL dies, even if she downsizes to a smaller property.

So to say that wealthy educated people are not affected (as they rewrite wills, avoid etc)if you have a selfish patriarch at the head of the clan.

Also to second what someone else commented to ww "It may hit harder in the SE but then people in the SE (or West Country)who already own property have benefited more from price inflation. You can't have it both ways" people in the SE only benefit if they move out of the SE to a less expensive area.

If they sell their highly value-inflated house, they then have to buy another highly-inflated one if they wish to stay in SE

RubyRoja - I was making the same point early on in this thread that you can't get probate without paying out first for IHT and other things. I didn't know for sure so it was reassuring to hear that somebody can back it up with experience. The original post queried the idea those who owe IHT aren't necessarily rich. I think you have proved the point - you don't have to rich to pay IHT and it is a financial burden.

To abolish IHT would apparently leave the Revenue short of £3.6 bn which would equal 1p on income tax. I think I personally would prefer that. Income tax is a fairer tax - you pay once on what you earn. The whole tax system is unnecessarily complicated and it would make things more transparent for the ordinary person if it were simplified. That way the ordinary person who doesn't do any tax planning doesn't suffer just because of ignorance of the mechanics of the system.

They benefit if they downsize when their children have left home, or move to be nearer family who do live outside the SE, or abroad, or just elsewhere in the country. If they choose to stay in a large expensive house they will have to pay higher council tax, but otherwise aren't personally penalised, and generally their beneficiaries will benefit enormously.

People owning houses in cheaper parts of the country don't have most of those options; and people who don't own have none of them.

I don't really get the argument that you should be "rich" to be eligible to pay tax. why?
that doesn't apply to any other sort of tax.
I would say that £300k in capital is, from any perspective, a huge amount of money.

Why can't people in cheaper parts of the country downsize and release equity? It is all relative surely. Obviously you don't get as much but that doesn't mean that it isn't an option.

But alycat's situation is really a problem with teh will. If he'd elft it all to his wife teh IHT woudl have becoem due when she died.

I agree that there are changes that could be made to way it is administered - ie paid when assets realised not within 6 montsh of teh death.

But still puzzled why some people resent paying it on a huge windfall that they have done nothing to obtain