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.

I actually do not know if they can tax estates more without looking like tyrants. It will be more sneaky probably, on gifts and such, but not sure how they will admin it.

Yes, it’s particularly challenging at the moment as HMCTS only answer calls until 1pm. My mother died this year and I applied for probate. At one stage in the process I had waited four weeks for a decision, for HMCTS to ask me exactly the same question again after a senior member of staff had reviewed my application. I asked if the senior member of staff struggled with reading comprehension, made a complaint and probate was then coincidentally granted. It was an absolute farce and took 5.5 months in total .

Why don't HMRC put a charge on the property and wait for it to be sold before they get their money?

A million pound estate is not “the little they ended up with”. It is a fucking fortune. Seriously, have a word with yourself.

Martin Lewis explains it as pretty much leaving it to your kids, as long as your estate is below 1m they’re ok?

Am I wrong?

What I've found fascinating is seeing how the people I'd regard as rich never seem to pay that much. There seems to be a complex system of gifts via family trusts that means a family is wealthy rather than individual.

Personally my family have taken the policy of give as much as possible asap whilst being thrilled to have to worry about it (first generation to have to!).

The people inheriting the money hasn’t paid any tax on it so I can’t see the argument about double taxation. Especially as you don’t pay any tax when your primary residence increases in value, which is where a lot of wealth has come from.

There could be a argument for reviewing the amount and the timeline/ process when people are grieving.

I’m about to pay 16k to HMRC in my next pay packet for CGT on vesting of company shares. My company use a share scheme instead of a bonus. If my parents instead had given me that money (I.e I had done nothing to earn it, I wouldn’t owe tax on it).
As someone who will inherit nothing and has received nothing from family, it’s galling to think that people who need to make their own way in the world will have to contribute more to UK taxes than others with greater means. Definitely should be some lifetime wealth allowance to ensure people who get hand ups from the bank of mum and dad are taxed appropriately

I'm not remotely bitter or jealous. I'm fine financially, I don't need any money I may get from my parents in future - only child - but I would be perfectly happy if they spend every penny they have in retirement. I would also spend everything that have to make sure they get the best care we can afford should they need it. They know this. My parents live in an ordinary semi in the northwest which would not remotely challenge IHT thresholds.

I do have zero sympathy for people bleating about having to pay tax on unearned income, and I find the bubble people must live in to think IHT affects most people frankly hilarious.

If it is the property part, then it is £175k each for a married couple allowances, that does not cover anyway near most property around my area.

I think there's a big difference between those who bought a house for 200k and die in a house worth a million... and those who legitimately earned every penny, I.e. worked hard for that million, buy a house, and then die five minutes later with kids.

I don't get the obesession with leaving an inheritance for your children.

Pass it on in your lifetime, enjoy seeing the difference it makes.

If you've got enough money to worry about inheritance tax, you can probably afford to pass some of it or a lot of it on in your lifetime.

DH and I are giving our DC their inheritance now, throughout their life, when they actually need it. By next June they'll have both finish uni with no debts, and will both be given a chunky deposit towards a house when they're ready (or if there's an equivalent that they need money for).

We've talked about downsizing our home in our mid 60's, and signing over whatever we buy to them, or put it in some kind of trust, we'll see closer to the time if/how best to do it so we can legally stay in the house for our lifetime but it belongs to them.

What we won't do is be like my FIL who is sat on wealth of probably 5 million+, lives alone, doesn't go on holiday, doesn't eat out unless we are paying, doesn't spend a penny on anyone, is always talking about and looking for ways to avoid inheritance tax and yet ignores all of the expert advice he's received so far, most of which is "start giving it away now, treat your family to holidays, take them out for meals, buy your DD the kitchen she needs, buy your GC their first cars, you can gift £X a year to anyone you like, set up trusts for your GC" - and he does none of it. DH has already said if he inherits anything from FIL he'll immediately give a third of it to each of our DC.

The individuals receiving the inheritance haven't paid tax on it.

I think inheritance tax should be introduced across the board with all estates paying 10% and estates of £1M plus pay more.

Also this @BooToYouHalloween . Your parents did well for themselves clearly, and were in relative terms throughout the country - minted.

I’ll tell my solicitor 🤣

It's an additional £175k per person, over and above the £325k per person excluding a main residence. So £1m for a couple where it includes a property. Hence only 4% of estates impacted by it

Am sure they are already aware…

There's a whole lifetime in which parents can pass wealth down if they so wish. If they can't or don't, the estate will be taxed. I don't have a problem with it. Apparently my grandparents estate is expected to be subject to inheritance tax, so be it. They'll be dead so it won't cost them a penny.

Don't be ridiculous, if you're in the south east you only need to own a modest property

The thresholds haven't risen significantly in some time and many in the SE are going to be caught out.

I think the unfairness is due to the fact anyone with significant wealth i.e. your 10 million pounds + people know how to avoid the tax but certainly aren't going to advertise the fact and have very discrete accountants.

It is the slightly disingenuous middle that believe they are saving to leave to their children that feel the full force.

This. My parents have never had a mortgage of more than £15k. My mum's house (Dad died a few years ago) is worth about £500k. it won't be liiable for IHT but I think it should be. If Mum died tomorrow, my sister and I would inherit £250k each of money we never earned or paid tax on.

Personally I think IHT should be paid on the whole estate. If that were the case, I'd still be getting money I never earned.

The double tax argument is also bonkers. I earn money, I pay tax on it. I go to a shop and buy some shoes with my taxed income - tax is included in the price. I book a holiday - tax is included in the price. I buy fuel for my car - tax is included in the price.

Lots of everyday things are double taxed

Exactly, they and I know how it works

Hardly. Even in the south east that's an expensive house.

Correct, down south property prices are still quite high

https://ifs.org.uk/publications/reforming-inheritance-tax#:~:text=In%20terms%20of%20the%20number,7%25%20by%202032%E2%80%9333.

There's the figures. 4%.

Clearly not most people in modest houses.