CGT on assets Inc primary residence at death

[DotPotato]

Morning all, here to find out some views on something I think should / could change in the budget.

At the moment there is a HUGE tax loophole whereby no CGT is paid on assets that you pass on at death. For example, you buy shares in 1950 and transfer ownership in your will, there is zero CGT paid on the capital increase you’ve made over 70 years. Same applies to property, even second homes. If you transfer ownership of the asset when you die, the inheritor receives the asset at the 2024 price but no CGT is due on the gain since it was bought by the deceased person.

This is just mad, especially as many assets will not qualify for inheritance tax, and there’s an exemption for passing on property of up to £1 million.

I think this should be closed in the budget. CGT should be payable by the estate on ANY asset that is transferred after death, including primary residence. After that, inheritance tax rules should be applied to what remains, potentially at a lower rate given that we are now applying GCT.

I think this would be a very fair way of taxing wealth that is 100% UNTAXED, because you’re not asking someone to pay tax on unrealised gains when they’re alive using income they might not have, and you’re not passing on freebies worth potentially hundreds of thousands of pounds to people who inherit just because they were lucky enough to be born to rich parents.

Interested in people’s thoughts and how un/popular it might be?

”…….. and you’re not passing on freebies worth potentially hundreds of thousands of pounds to people who inherit just because they were lucky enough to be born to rich parents.”
I don’t get why in the uk people resent children getting inheritance.
if you really want to tax ‘lucky freebies’ - tax lottery winnings that’s the true lucky freebies

Don’t you think we should be taxing wealth, particularly given we have a huge number of people who have enormous assets and low income?? Taxing at death gets around this.

Agree on lottery and betting winnings.

My children will inherit well. No issues with this obv! But I do have an issue with untaxed wealth… that for me is what’s at the bottom of it all.

Sorry this doesn’t make sense - it’s his business that he’s built why is that me me me?
poster suggested we all pay more tax
its your right to have socialist ideals but its others right not to

Nope. Sorry, not having that. Dh and I have worked for 40 years, done all the right things, saved, pensions etc. Planned sensibly, lived within our means, driven old cars,.looked after ailing relatives ourselves, been good employers with loyal staff, run a business in the UK for 40 years - manufacturing which has been a shitting nightmare to keep going despite taking a tiny personal salary now.

What have you done apart from decide people you don't know are rich enough to fund your lifestyle?

Yes, I do. See my post about abolishing the CGT relief on main residences!

I think it would have to be applied to all house sales to avoid people buying and selling frequently to avoid the final CGT or who just move a lot. What if the house isn't sold after the owners death?

You are already potentially paying 40% IHT and then another 20% CGT so 60% of the family home goes to the taxman, sounds really fair. How are people who chose to rent going to be equally chastised?

What about the scenario where a parent dies young and unexpectedly leaving children under 18 . How would you see that one playing out ?

I think there should be more tinkering with CGT as you say. IHT is very unpopular because many people feel they should be able to pay on their main residence at the very least although the threshold is already pretty high.

I don’t think we can tax income much more tbh.

Well - this is likely to include you in the untaxed wealth bit of your children will inherit well - so just donate what you think is fair to the government? That way your conscious is clear.

So if that’s the case do you think there should be indexation on all other assets? Why is property different?

What have you done apart from decide people you don't know are rich enough to fund your lifestyle?

And this is why it’s not possible to have reasoned debate!

Yes, good plan.

Not when my perfectly sensible suggestion is cited as being everything that's wrong with this country, no.

Yes someone else should have to pay, the wealthy. All you have to do is raise income tax for additional rate. None of this crap, penalising people when they're grieving, taking away family homes

Agree totally.

The threshold is very low. If you live down south and your parents planned their retirement well or died before they needed to use the bulk of their savings or sell their property to pay for care, then an average estate is easily going to top 700 k plus

I don’t get why in the uk people resent children getting inheritance.

I don’t think people do but we have big issues in the country, low stagnant wages, ageing population & crap public services. The money has to come from somewhere but no one wants to pay. I’d rather pay it out of inheritance vs more income tax.

That’s how it used to work with CGT - quite complex calculations with indexation and various reliefs for different types of assets.

Wealthy means wealth. Wealth is assets. Assets are not taxed enough.

Yes someone else should have to pay, the wealthy. All you have to do is raise income tax for additional rate. None of this crap, penalising people when they're grieving, taking away family homes

So how much do we tax the wealthy? And who are the wealthy? Are you wealthy if you earn well but don’t inherit anything? Not wealthy if you do inherit? We tax higher earners in line with most other Euro countries, it’s the middle earners that pay more elsewhere.

Same.

Because as much as I’d like it to my donation isn’t going to fund any meaningful improvement to public services!

The threshold is very low

I think 1m before tax is ok. Both my parents house & in-laws homes are worth more. It’s not particularly because they worked harder than others it’s more because they bought in areas of London that gentrified.

Is it fairer to tax money that someone has got for doing nothing, or tax money someone has got for working hard and contributing to the economy?