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.

You can work out the basic inflationary effect if you wanted - house prices have risen substantially faster than inflation

so bought for 100k in 1999 would be equivalent to 190k based on inflation ( and does the inflation figure take housing into account ) and sold now for 350k that’s 160k unearned wealth

So people will and do dispose of income past their bank access threshold

They also don’t have access to offshore accounts

They also don’t have access to offshore accounts

Yes, they do:

https://www.finsburyrobinson.co.uk/articles/hmrc-what-it-can-and-cant-find-out-about-you

Currently is the key word here.

With pensions IHT change it's going to increase dramatically.

Most important is to hang around for the next four years - by 15th Aug 2029 latest there unfortunately will be ultra right government in the UK and abolishing IHT is likely to be one of their first policies.

So for high earners and wealthier people who are terrified (like me) by prospect of Reform it makes all sense to try to flee UK asap if they can. For the rest - work on your health and try to make it for the next four years until these lunatics are gone

The ultra right wing government wing abolish anything
be lucky if they show up

Perish the thought that rich people should contribute to society!!

Interesting read thankyou

Of note when a relative of ours died with finances offshore Hmrc requested access from us.
We were told the request was necessary for them to access accounts as they had not presented a viable reason to do so.

From Reading around the subject at the time the requests must show there are known anomalies. ie… good reason for HMRC to suspect fraud

They can’t access accounts without it

Higher earners are the net providers
Higher earners pay higher taxes
Higher earners are more likely to use less state provision ie private schools and health care

They already provide far more ££££

people with more contribute more of course - so ?

they should and the more they have the more they should pay - but at least they will be dead before they are expected to pay out on their unearned wealth growth

inequality harms society and rightly makes the bottom rungs very angry and that’s very dangerous for society

Not everyone is rich enough to afford to leave pension funds untouched to pass to future generations!

The pensions change will only affect people who are rich enough that they SHOULD be paying more tax. They would have paid tax on the pension fund had they lived to draw it - why shouldn't IHT be payable if they die?

Or just live in London. My husband's granddad was a black cab driver all his life and had a 3 bed semi in a deprived area but his assets at death was 1.1 million quid to be divided between his 3 children. 2 of his children owned houses worth 400k and also had spouses so will probably be millionaires as well. My mother in law had a 3 bed house in zone 3 and if it doesn't all go on care costs and she inherits something from her father (and it doesn't all go to her brother as her father is quite traditional), she would be a millionaire as well. She will definitely pay inheritance tax as a divorcee as her threshold is only 500k and no 3 bed house in nw london zone 3 is worth only that.

I am very pro inheritance tax but almost everyone from the boomer in my family and dh's family will be millionaires.

I think it’s an absolutely awful tax and should be abolished. The money has already been taxed by income tax, I should be able to give it to my children - it’s my money! For example if I buy my children something today, and then die tomorrow they will have to give back 40% of it. It’s crazy.

It totally distorts the housing market in London. My husband's aunts just inherited 333k tax free each out of a 1.1 Million quid asset and that is mostly because of a 3 bed semi in a deprived area of London (additonal 300k was from investments) most mumsnetters would refuse to live in.

Dh and I bought our London flat by saving up, 70k in 3 years in our 20s. Other people just got gifted it and fairly ordinary people too. It made the London property market an inheritocracy

Actually it would come from your estate, but indirectly I guess they would lose out.

There’s a big problem - isn’t there? - for the kids inheriting and faced with the tax bill because they can’t access the inheritance to pay the tax bill for so long. As I understand it, it now takes ages to get probate in England. What do these people do ? Take out loans to pay the tax?

When is the tax payable - does anyone know?

Within 6months Once you declare it in probate

but if the moneys locked into property you have to pay the bill even if the property hasn’t sold yet

You have six months and after that interest is charged. What I didn't know until just now having just googled is that you have to make a payment to HMRC towards the IHT full amount before probate is completed.

Yes this is correct - it’s already an unkind way of dealing with bereaved family members .

I remember the fear wondering how I was going to find the tax on my fathers estate ( before I found out about the raised threshold for leaving property to DC )

Thing is, all these propsed changes lead to changes in behaviour. People leaving, relocating, bunging money in isas, buying annuities to reduce pension pots, hiding assets.

What's to stop people going to the cash point every week and withdrawing a hundred pounds at a time and just giving it to your kids? Buying gold jewellery and just giving it away, buying clothes, food shops, the list is endless. If it comes out of income, which you are drawing down anyway, it's untraceable.

But it won't only be the rich or even the comfortably off who'll be affected from 2027. If you've been paying into a pension for decades and that pension will be added to your estate (which includes a very modest house for example), you will easily pass the threshold and chances are the people in that category will be average or above average earners.

But what if the value of your house has increased because you had paid for an extension which was funded from your earned income. We bought a 4 bed, 2 bathroom house. We now live in a 5 bed, 3 bathroom house - same house, we haven't moved (extension necessary due to disabled family member, but all paid for by us).
Should our estate pay tax on the added value of the extension we paid for?

Since the current changes have been brought in there has been a massive drop in inheritance tax revenue for the government.
They’d get way more if the dropped it and started at a lower sum. Actually they’d get way more if they dropped it to a tolerable rate (probably somewhere between 20-30%).

I think you're thinking of CGT? IHT has been a big money spinner for the government.

Currently is the key word here.

With pensions IHT change it's going to increase dramatically.

Agree with this and that people will start being angry about it when it starts to affect them, which will gradually occur, they just haven't realised yet.