Inheritance tax changes

[AhBiscuits]

Any speculation on what changes will be made? Is anyone trying to put measures in place before the budget?

My dad died suddenly in August. His estate is not liable for inheritance tax as he left his home to me and my siblings, he had inherited my mum's nil rate band and it was under a million in value. I have made sure to get the probate application submitted this week though, because who knows?

My inlaws have just signed their second home over to DH and his brother and are now renting it from them. They expect to live much longer than another 7 years. They are hoping this will remove this property from being part of their estate. But again, who knows.

I don't agree with inheritance tax. People have worked hard for their money and were taxed on it. It should be theirs to use as they wish without another tax. It was really important to my dad, and it clearly is to my inlaws, that we inherited when he died. He lived frugally, despite our protestations, with this in mind.

My parents total estate is circa £750k inc property. Probate was granted this week coincidentally. My brother & I are inheriting, no IHT.
I know this is probably a really daft question, but if labour suddenly introduced, say, a 500k limit for IHT, would we have to pay it once the property’s been sold? Even though probate has been completed?

Difficult to say definitely but I think it is unlikely.

Most unfair or the Government they should have done this quicker.

The Labour government should have implemented a budget measure before its first budget - is that what you mean?

Perhaps CGT should be applied on the sale of any property which has increased in value otherwise there are plenty of people taking advantage of that unearned and untaxed rise.

This. Lots of people bought their homes, lived in them their whole lives, and found that those homes had increased in value hundreds or thousands of times over. You don't pay capital gains tax on your main home so that whole gain could be tax free if inheritance tax wasn't charged.

Only the top 4% of estates pay IHT. It's a nice problem to have.

I won’t blame you or your ILs, when we feel that the gov (and some of the population) only sees us a cash cows of course we’ll do everything to minimise the amount we pay.

See also people liquidating ltd companies before the budget date in order not to pay an increased percentage of CGT.

I have made sure to get the probate application submitted this week though, because who knows?

I would be absolutely staggered if any changes brought in applied to people who have already died.

Personally I think inheritance tax should be increased significantly (and I say that as someone who would be affected if my parents were to die tomorrow, so any changes would increase the amount due on their estate).
But I would also look at the loopholes that allow the richest people to avoid it.

We have another two weeks of this guessing and worrying. Most unfair or the Government they should have done this quicker.

@NewGirlinClass The last five years or so of the Conservative government leaked every budget thought and proposal to the press to see which way the wind blew before deciding whether to proceed with it or quietly withdraw it.

People just wouldn't move house if they could possibly avoid it. Especially older people who have a lot of equity. Would make the current housing problems so much worse as the supply of family homes would be even smaller if nobody downsized.

The 4% of estates who pay IHT doesn't mean the richest 4%. They have protected their assets.

I would assume the 4% is those just over the threshold made up mainly by their homes.

The very rich don't pay IHT.

In Spain there is no IHT threshold. All estates are charged IHT on a sliding scale with the largest estates paying a bigger percentage. My father was an expat who died in Spain and every penny of his very small estate was subject to IHT.

Taking unearned wealth from 7% of estates isn't exactly hovering up everyone's wealth

The Hyperbole makes you sound a bit daft, and I wouldn't want to base a national policy on ideas of daft people

Sorry if you are impacted , it's not nice to see your unearned wealth reduced in size

Admitting that it's unlikely to affect me - but if it does I won't be whingeing

And no I won't encourage my mam to hand over her house early to try and avoid tax or care costs as I think that gives her security and the ability to chose better care than the basic state package. Cos I love her not her money

So are OP's DH and his brother now paying income tax on the rental income from the IL's former property at highest marginal rate for next 7 years? Was the property worth more than £1m?

There are many many people who inherit nothing. While I appreciate people want to leave inheritance to their nearest and dearest, it only increases the wealth divide in this country to keep handing down wealth to generations of the same families.

Care homes do not cost £24000 per year. My dad's ( 2019) cost £50000, my father in laws £75000 present day. And they are average. Not London prices either. Care at home can be cheaper or more expensive depending on what's needed. Those that can pay subsidise those that can't. Most people will need some care at some point. Vast profits are made from social care. The richest UK family owns a string of care homes, most are foreign owned so profits leave the country. They are franchises. The staff do not get paid much but someone creams off a great profit (not the person who takes over the franchise).valso paying for care sadly doesn't guarantee good care. FILS home is good my father had mixed care. First home was good but night staff bullied him. We moved him to a nearer home and he fell out of a very high bed and after that declined. Nursing care was shocking although it was a home with good reviews etc. He died soon after. It was very difficult to get him a place we didn't have much choice. How can people be so naive about what goes on?

My mother saw her own mother horribly neglected and abused in a state-run care home during a Labour government in the 1970s and my parents saved hard to try to ensure they would not suffer the same way (or inflict the feelings of guilt on me and my sibling). Sadly my mum died early with breast cancer and my dad then had a long and painful decline with Parkinsons, during which he funded his own private care at a cost of £2k per week, so the state paid nothing.
But yes, let's encourage everyone to spend, not save, during their lifetime and let the state pick up the £100k tab per annum for elder care?
Or is it just a co-incidence that Labour are also supporting the voluntary euthanasia bill??

I agree with posters saying that the richest find ways to protect their wealth (through complex trusts, for example), but it’s the estates of those who have saved and been frugal that pay, These people don’t have fancy accountants, they live frugally and accumulate savings and investments in case they need to pay for their care at some point -then they die before actually needing it.

I think that’s very unfair to punish a family for being prudent and trying to save the government money by saving for their old age. Personally, I think a sliding scale for IHT would be much fairer, especially if the tax threshold is lowered. An estate that’s slightly above the threshold shouldn’t be taxed at 40%. Otherwise savers are being massively taxed and sometimes taxed twice if it’s on money that they first paid income tax on and then the estate is hit with IHT.

£325K will only pay for a few years of care in a home so it’s good when people have that or a bit more to spend, instead of expecting the government to fund them. Why not raise the threshold slightly to encourage this?

You can set up insurance policies written in trust, which fall outside your estate for IHT. We have done this for our children.

That’s a good idea, @Abra1t I expect you’ve also got money saved in case you need care though? £325K doesn’t go far in that situation. As I said upthread, that’s what gets me, when someone has tried to ensure they’re financially independent in their old age, and then their estate is punished for it!

Radio 4 said this morning that 4% of people pay inheritance tax. In my case, purely because a relative owned a property in an area that shot up in value.

I don't have any problem at all with paying the tax. I use public services: roads and the schools, the fire service, the police, the refuse collections, the NHS etc etc. I would rather pay tax than have to pay privately for all those services whilst others who can't pay are worse off.

Society can't run without taxes. IHT seems a fair tax on getting lucky with property values.

As someone who would pay inheritance tax both as a giver and recipient of inheritance, I'm glad. I will have done not a single thing to deserve such a massive tax free windfall, neither will my children. Whereas I work long hard hours for the money I actually earn and am then taxed heavily. Seems bonkers and massively unfair to me the money I work hard from gets a big cut taken out so that the richest 4% of the country can have a massive great tax free windfall.