Government looking at inheritance tax

[HarryVanderspeigle]

It says on the news today that the treasury are looking at reforms. Potentially looking at increasing the seven year rule, or a lifetime gift allowance. I don't really see how that would work as we all know that wealthier people will spend more on their children for things like weddings, university expenses, getting on the property ladder etc. But if it is to be reformed, how would you do it?

I often wonder if the objection is because 40% is so high. Would it actually raise more if it became 20% on estates over £100k? I can't see them putting the percentage up and we all know that very rich people find loopholes anyway.

So if the government just taxed your estate on unearned income

so if you purchased your house for £100,000 when you die your house is worth £350,000 they could just tax the £250,000 profit unearned at 40%

They should just treat it like income and the recipient pays it at their income tax rate. If the recipient lives outside the UK and so does not pay income tax then just treat it as if its their UK income for the year and tax it before it leaves the country.

If the thing you're opposed to is, as you put it, being 'taxed again'. Does that mean you are also opposed to VAT, council tax, stamp duty etc?

What if you want to leave all your money to a cats home (or whatever) should your kids, likely to be 61 (average age to inherit in the uk) get the money anyway?

It isn’t unearned profit though, at an average of 5% interest you would have paid an another £150k over 30 years, never mind the amounts you would have paid for repairs and maintenance.

Also the number of estates paying inheritance tax is forecast to double with pensions being included.

It is also misleading in that there is no inheritance tax between married couples, so the tax will be due on second death and will not be counted the first time.

It is also only counting the number of estates that will be paying the tax. Realistically, there are usually children and grandchildren who are paying it so each estate impacts a number of people who effectively pay this tax!

You choose how to purchase your home - if a mortgage is the way you do it and you pay interest ( it could be 15% which was the case during my mortgage) that’s nothing to do with the profit you make on a property increase or decrease.

Meant to add, it’s still unearned income

Brilliant idea.

So I'm an entrepreneur, my business is growing, I'm now worth about 5m, employ several people. It's not only ongoing taxes on me (NIC, business rates etc) ever increasing, but whatever I earn I can't pass on to my kids? well, bye, I'm off to a more friendly jurisdiction.

Or - I'm now a high earner, mortgage paid off and I have 1m of assets. I continue working and paying many k of taxes. IHT changes mean I can't pass most of it on to my kids. I stop working right now and spend it all. If at the end of my lifetime I fall short there is a welfare state. Hang on, who's paying taxes to subsidise it?

I am aware that you cannot include your interest in the tax calculation. Nevertheless, it is a cost to you of buying the home and therefore you don’t actually make a profit!

Capital gains tax receipts fall 10% as wealthy exit UK

Capital gains tax (CGT) receipts fell to £13 billion in the 12 months to March 2025, down 10 per cent from £14.5 billion in the same period last year.

I am astonished as to how people don't consider behavioral impact of taxation.
If they push ahead with this nonsense UK will become economic ruin with no skilled driven people ever staying / coming / investing here.

Interesting proposal, not one i have aeen before. I wonder if this would just result in more people passing money down to grandchildren instead. Children and younger people pay less or no income tax. Would you receive everything at your current rate of tax, or would it push you up to the next levels if it took you over £50k or £125k as a result?

If you want to do that, I guess you do that. Re kids of 61 - who have likely done a lot for you in old age

I really can’t understand why they won’t target the rich more.

The more I think about it, it’s bloody ridiculous that they don’t look at companies like Amazon, at those on £10 million (on whom they’ve just rejected a tax of 2%). But no, much easier to go for people whose parents left them a £100k share of a cheap terraced house. Socialists my arse.

You do know that she tried that by abolishing non-dom status. You would have to be a complete idiot if you think someone would stay here if it cost them millions of pounds in tax they would otherwise not have to pay.

Since you have such a strong opinion on the subject , I’m surprised you didn’t know that some of them are asking for it.

Inheritance Tax should be abolished.

The idea of limiting gifting is a nonsense really, surely people would just give their kids a debit or credit card or pay their household bills for them directly.

How on earth could HMRC police any limits?
An honesty system like at present? Same as Capital Gains Tax, many people simply don’t pay it when it’s due.

Because they check by going through bank statements, information you have with credit companies, land registry docs etc.

If I could "opt out" of those things, I would! But obviously, I can't. I do find it utterly ridiculous that to move house I have to pay a massive tax, from already taxed income. And now there are rumblings about a "wealth tax" on property. If I am paying in excess of £200k in stamp duty, that is already a wealth tax, from previously taxed income. How much do the government want? All of it? The percentage of income lost in taxes, both direct and indirect is astronomical and so much of it is wasted.
And, as per the example of @nearlylovemyusername where is the incentive to strive for more? To work and save? To take the risks required to set up a business? Growth is already stagnating, unemployment is rising. We cannot simply "tax" our way out of this mess, there are not enough net contributors.

That was entirely predictable. How did Reeves and Starmer not see it

Well I'm completely against any tax on gifts or wealth from parents to children. It's my family and I'm damn well going to gift them what I Iike, when I like. What's the point of doing everything you can to set up your children if 40% gets taken away.

The government can't have it all ways. They want you to support yourselves, support your children through education (uni not private schools of course) help them on the property ladder, move wealth down to the next generation, but then tax you on it!? Oh, and when they've done that, they want you to support yourself in your old age, including subsidizing others in the same care home because they don't pay enough to cover the costs of care. So they want you to pay for yourselves, pay for your children, pay for everyone else, and then penalize you when you have achieved that.

Cash out everything, buy gold or keep it all under the mattress.

I agree. At some point I will the calculation how much I have actually profited from my house. Big mortgage, high interest, stamp duties, improvements. If you could deduct expenses from your main home, like you can if you are a landlord, the profit ift quoted on MN from those greedy boomers, would probably be reduced quite considerably.

Currently only 4% of people in the UK pay inheritance tax ... it's not something the vast vast majority of people have to worry about. And if they are eligible to pay it then they are rather wealthy IMO!

I would publicise how few people actually pay inheritance tax.

I would raise inheritance taxes, in a stepped way, on really large estates.

I would regard that £250,000 as inflation.

It’s all relative and will still only buy the same house in the same road.

If, however pp had doubled the size of their property with extensions then that’s development and I believe that should be taxed under the capital gains tax rules at the point of death. ( or when selling but that’s another thread )