Inheritance tax - a morbid tax but one which impacts a loft of middle class families

[mids2019]

Inheritance tax may be on the increase in the next budget but having just been through probate it for me thinking that iht really impacts a lot of lifetime savers and those with property.

Parents have already paid tax on the income they have saved so there is a moral question over the governments ability to.tax the money again. Is this really fair and isn't it a right we should have the ability to pass on our property to our children?

Also surely it is the middle classes that suffer as I guess anyone with serious wealth protects their assets through complex tax avoidance schemes e.g. footballers, celebs, bankers etc.

But the parents aren't paying tax again.

isn't it a right we should have the ability to pass on our property to our children?

No. It's not a right. HTH.

If the estate isn’t over a million, you will be ok

A lot of the wealth was unearned income through property so was never taxed.
Added to that an inheritance is unearned by the beneficiaries as well.
I agree that it should be tightened up so the richest pay it, but other than that I really don't understand the issue the majority of people have with it (a lot of whom will never be impacted by it).

In the hands of the heirs, it is a benefit that many others will never get.

It is unearned by the recipients isn't it?

The only other tax free thing I can think of is part of pension pot or a Lotto win.

I inherited a chunk from my parents along with my siblings. We had absolutely no issue paying a whack of Inheritance Tax. We got a great benefit and it was a bonus for all of us, even though it was through the sad deaths of our parents. Such is life, and the only two certainties are death and taxes.

Totally agree

It’s not as simple as that.

Also been through it recently. It’s absurd. It was initially meant to be a tax on the actually wealthy but because they’ve never adjusted the rates - anything about £500k that includes a property going to direct descendants - most people are swept into it. It makes me very angry when I think about it. Not to mention the way it’s done - six months after date of death I was still a wreck. We were fortunate our parent had left liquidity to deal with the IHT as the flat hadn’t even been put on the market by that point (and even so it was still a nightmare thanks to those fuckers at NatWest. I was on the verge of panic attacks).

Not having to put the flat on the market asap also afforded me the time to deal in a therapeutic way with all the items that were left behind. The nightmare you have to deal with when you owe a shit ton of IHT on a property and don’t have the liquidity to pay it off immediately when they are in the middle of their grief is inhumane.

People that haven’t been through it don’t have a clue.

About what?

The nightmare of dealing with HMRC and HMCTS to start with.

Savings are normally earned and taxed.

In any case property is paid with taxed money. If you mean the gain over the years ok fine but why can’t that benefit the next generation or grandchildren now that prices are higher?

It is a ridiculous tax when you think about it. Plenty of developed countries are nowhere near as punitive on inheritance.

You'll get many here who won't sympathise, but I agree the system favours the super wealthy who have access to all sorts of trust vehicles and loopholes for beneficiaries to avoid an otherwise significant tax burden while the comfortably off middle classes (I'm sure I'm putting that wrong but can't think of a better way to describe that demographic) come off worse for being legally compliant.

anything about £500k that includes a property going to direct descendants - most people are swept into it

You must know this isn’t true. Most people do not leave anything like £500k in their estate, especially if they are half of a married couple so only half of their property is included.

Its not black and white.

Yes less than 4% of estates pay it.

Is this going to be another “vat on school fees” thing, with 99 threads a day complaining that their parents only left them a million quid, and they are really struggling to get by on so little?

OP, did you have to holiday in the UK one year, as a result of inheritance tax? Or perhaps you struggle to run two new cars? 😱

Yes that can be traumatic at a very sad and difficult time.

My brother was the executor in our case and he handed everything over to a solicitor. Worked well he said, and of course solicitor charged his fee, but brother said it was worth every penny to get the worst of the "work" done by someone else. It wasn't a huge estate either but above the threshold.

I do understand that this might not be financially worth it in some cases.

The vast majority of wealth from a typical middle class family inheritance is completely unearned as it's from house price rises. My parents bought for £42k, they have sold and bought again for cash but current house is worth £650k. They didn't earn the increase

Most. 🤣🤣🤣

My parents' estate will probably have a lot of tax to pay. It is what it is. They could have spent their money 20 years ago cruising around the world or whatever. But now age 90+ at least we know they have the funds for whatever care or adaptations are needed, and that is a wonderful safety net.
I'd like there to be something to hand on especially to give my disabled daughter more security, but we aren't relying on it.

Anyone who owns even a garage in London.

Fascinating that’s what you took away from that whole post. The bitterness and jealousy some people have overrides any sense on compassion.

FYI my parents came to the UK as immigrants speaking barely a word of English between them. They worked very hard for the little they ended up with.

4% of estates pay IHT, this is expected to rise to a whopping 7% by 2033....

If your estate attracts IHT you are wealthy, no questions.

But if you don’t save it and you spend it during your lifetime you’d pay tax on the things you buy with it, the government need to get their cut one way or the other and it’s better to have that money moving rather than stacked up in the bank accounts or property portfolios of a small number of families.