Inheritance Tax

[Luckydip1]

Rushi Sunak has floated the idea of abolishing IHT, at last, this has got to be the most hated tax in Britain. Why tax people on what they have already been taxed on. Now I can pass my house onto my children without it having to be sold to pay IHT.

i very much doubt this will happen

Inheritance tax is rarely due anyway. Very rich people pay tax advisers shedloads of money to avoid it. The vast majority of the populace don't leave enough for it to be due - you have to leave £325,000 after paying off any debts and the funeral. Anything you leave to your spouse is exempt. If you leave your house worth up to £500,000 to your children or grandchildren, that's exempt. In the case of a married couple, if the first spouse to die doesn't use their inheritance tax threshold because of leaving everything to their spouse, that threshold carries over and when the second spouse dies that can mean up to £650,000 is exempt from IHT.

I think we should pay more, not less. It could be branded as an insurance policy to pay for social and nursing care for the very elderly and for people with various chronic illnesses and disabilities who need a lot of support. It's very unfair that some families have to sell a family home to pay for this care while others who have just got lucky and not had a relative with dementia, Parkinson's and so on get to keep the full value of the estate.

Why would you think this was the most hated tax in Britain? Happy to be corrected but I think I read that only 4.5% of people have to pay it?

Why would you think this was the most hated tax in Britain?

That is the Tory spin on it, which OP is parroting.

There are plenty of “double taxes” - VAT, council tax, stamp duty, insurance premium levy… should we abolish all of those too?

If you’re paying IHT you’re either a millionaire or a single parent in a house worth more than £500k. You’re pretty well off. In a cost of living crisis when the NHS is in dire straits, abolishing a tax only the wealthy pay seems an absurd thing to support.

Hardly anyone pays inheritance tax, for reasons mentioned above. Lots of people think they will have to pay it when they almost certainly won't.

It's a ploy to get people to vote Tory.

The thing is, you’ve paid income tax on some of your estate, but not on the gain in equity you have in your property.
I bought a house for £25k 40 years ago. Probably have spent £100k in mortgage payments (which used to be tax free) and upkeep over the years. It’s now worth about £450K. That’s an increase of £325K, no tax has been paid by me on this. If I died and passed this onto someone else, they would be receiving that money as a gift, no tax has been paid on it, they’ve not done anything to earn it.
Generally the average person’ estate, who has an average home outside of London, who’s never been a higher rate tax payer, will be below the IHT threshold anyway.
So, very rich people will get to give more of their money away to their children, who are already rich, at the expense of all UK residents resulting in the decrease in money available to the Govt (£5.76 Billion a year).

From Gov.Uk

• In the tax year 2020 to 2021, 3.73% of UK deaths resulted in an Inheritance Tax (IHT) charge, decreasing by 0.03 percentage points since the tax year 2019 to 2020. This means the proportion has been relatively flat since the tax year 2017 to 2018 - likely as a result of the introduction of a new tax-free allowance known as the Residence Nil-Rate Band (RNRB) from that year onwards. The RNRB is available to those estates that transfer their main UK residence to direct descendants on their death.
• The total number of UK deaths that resulted in an IHT charge has increased. In the tax year 2020 to 2021, there were 27,000 taxpaying IHT estates, an increase of 4,000 (17%) since the previous tax year, 2019 to 2020.
• IHT tax liabilities created in respect of the tax year 2020 to 2021 were £5.76 billion. This was a rise of £0.8 billion (16%) compared to the previous year. The rise in IHT tax liabilities created is likely due to the rise in the number of overall deaths in the UK in that year, which resulted in a knock-on rise in taxable wealth transfers. The number of deaths in the UK rose from 612,000 to 722,000 (18%). This rise in overall UK deaths will have been due, at least in part, to the effects of the COVID-19 pandemic.

I suggest we Increase IHT and ensure all the money raised is funnelled towards a specific area such as improving elderly care provision.

In the vast number of cases it's not a case of tax people on what they have already been taxed on, but taxing people on the capital gains of a property that has risen in value through no effort of the owner(s).
There's already a pretty generous threshold, as PPs have pointed out, what we should be looking at is the very wealthy who avoid IT by creating tax-dodging trusts etc.

this has got to be the most hated tax in Britain
Wouldn't that be the Council Tax?

It isn't difficult in London to pay IHT as a single parent..my MIL earns below minimum wage but her house is worth £600k (she bought it in the 1990s). Her youngest daughter lives with her and would never be able to afford to rent or buy and I was hoping that the house would just go to her.. but if inheritance tax is due, DH and I would probably have to pay £40k in inheritance tax to keep the house..at the same time I do think we need inheritance tax so I feel conflicted about this.

Honestly though if we made inheritance tax payable after sale of the house I might feel better about the whole thing cos I am sure I can find somewhere for SIL to live for £500k.. don't want a penny of MIL's money as we own our place but her other kids need it

DuchessOfSausage · Today 12:28
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Hardly anyone pays inheritance tax, for reasons mentioned above. Lots of people think they will have to pay it when they almost certainly won't.
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It's a ploy to get people to vote tory “

Or to take a last stab at enriching themselves further before they’re hopefully sent packing next year.

All the single people with no children get clobbered.
I have family and friends I would like to leave my house/money too.
Have payed tax worked all my life as yet never claimed any benefits but will end up paying inheritance tax.
you can be wealthy as long as you are married/civil partner and or have children you are very unlikely to pay a penny.
Anything over £325,00 I will pay 40% tax on. I suppose I will be dead so what am I worried about. They may not be my children but they are my family I should be treated equally.

I have paid it and don't agree with abolishing it. However, there are fairness issues due to the disparities in property prices across the UK and the ease with which the very rich evade it. It's also unfair on the childless, whose heirs cannot benefit from the higher thresholds for children (the residence nil rate band) - why should a nephew or niece who has looked after an elderly relative pay much more IHT than a child?

Is it not the same rate for everyone, then, Beautyfadesdumbisforever?

Most people who live in London and didn't have the good luck to be able to buy a house or flat decades ago could do with a windfall to help them get a place of their own. Even renting needs a deposit. We're seeing social mobility getting worse and worse in the UK and one of the reasons is that some people get that leg up by means of an inheritance from parents or grandparents, and many others don't.

I think the threshold might need to go up a little, but I wouldn’t scrap it

Wonderful tax. It will affect us a lot but mostly because of unearned wealth - property and investments. Taxing capital gain - which is mostly what IHT does - is entirely fair.

There's a good case for saying inheritances left to a spouse who was living with the deceased should be exempt. It was an absolutely flagrant and desperate attempt to get votes to say that houses left to children and grandchildren should be exempt. That exemption should be abolished. I would exempt small estates, make medium-sized ones pay a moderate amount of tax, payable in instalments if necessary, and the large ones would pay a higher rate. HMRC should be funded to make sure that tax is paid and avoidance schemes are outlawed.

You can leave your home, worth up to 500k, IHT free to your child, but not a niece or nephew.

100 billion is passed on as inheritance every year
Splitting the country between the haves and have nots, making social mobility much harder
Less than 4% of estates actually pay inheritance tax

If we want decent education for our children , a health service that includes dentists, to have people care for the elderly we need to raise more money

Should we
A) give up on making health and education better
B) tax living people more
C) raise a bit more not less from inheritance tax ?
D) invent a unicorn find a pot of gold to sort out the country
E) I don't care - I'm rich and can pay for everything I need , and everyone else can go to hell

I don't like the concept that anything you acquire in life can't be passed to DC and DGC without them being taxed. Surely people want to pass things on to those they love. I don't like Sunak at all but I think if he brings in a much higher limit or abolished IT altogether it would be good. I also like the abolishing of EPC C rated for LL whilst allowing everyone else to avoid it is a good policy too. Better to make everyone reach a D target. I'm happy with him putting net zero back until other countries start to act too. I hope he comes up with a few more policies I can vote for because up until last week I couldn't have voted for him.

this has got to be the most hated tax in Britain

Why? The vast majority of estates won't pay it. And if the estate does pay it, they're clearly still leaving a pretty decent amount.

Obviously financial situations can change massively (care costs particularly spring to mind) but if my parents died tomorrow there'd be IHT to pay. And I don't care. I'd still be inheriting hundreds of thousands tax free, plus a very decent chunk of the taxable amount. You can't inherit £325k+ and seriously think it's not enough.

How Inheritance Tax works: thresholds, rules and allowances: Overview - GOV.UK (www.gov.uk)

@caringcarer , but you can leave a sizable estate to your DC and DGC. If you have any sense you arrange your affairs so that they aren't affected.

@Gasp0deTheW0nderD0g said

It isn't difficult in London to pay IHT as a single parent..my MIL earns below minimum wage but her house is worth £600k (she bought it in the 1990s). Her youngest daughter lives with her and would never be able to afford to rent or buy and I was hoping that the house would just go to her.. but if inheritance tax is due

Would IHT be payable? AIUI, and as PP's have said, there are exemptions and additional allowances where a home is left to one's immediate descendants.

If it were prospectively payable there are things your MIL could do now to mitigate it. My own financial adviser is over it like a rash.

Setting up some sort of trust or whatever would cost a few £k but a lot less than the £40k mentioned above.

My Mother died in 2017 leaving an net estate in the order of £600k including her flat. By the time the exemptions for property and some unused exempt band from my late Father was brought in to play no IHT was payable.

this has got to be the most hated tax in Britain

Absolute rubbish it is, goodness sake op get a grip.