Labour voters….

[CurlewKate]

…… what do we do now?

Dunno. Why don’t you ask some? There are plenty around. We should be grateful, they’re fantastic nurses.

Or reduce the IHT rate from the stupidly high 40% so that more people "accept" paying it rather than paying tens of thousands in professional fees to set up trusts etc to avoid it. Going from a 0% rate to 40% is far too high a leap. I'd far rather see it at something like 10% over half a million.

If you get the full allowance you get a 1m before you pay 40% which isn't that bad imo.

However, neither the government nor the care homes want to incur the costs of the training and higher wages.

The public don't want to pay it either

The only people who do not plan for inheritance tax and end up paying a lot are those with net assets between 1 million and about 3 million, or who have a completely unexpected death. Everyone with assets above 5 million plans around inheritance tax quite substantially and well in advance. You would be stupid not to. And even those without direct descendants tend to prefer to leave a large inheritance to a charity of their choice, rather than HMRC.

The Philippines do a very good line in creating highly trained medical staff that they export elsewhere. It’s a huge industry. It isn’t just the U.K. they go to. Nursing/care work is seen as an extremely respectable and important career choice.

IIRC some, particularly doctors are starting to leave the U.K. for places where the pay and conditions are better, including their home countries. This is a ticking timebomb that isn’t getting talked about much.

The country gets good value out of trained young skilled immigrants who end up working for at least 30 years here. Those who only work for a few years and arrive middle aged are not good value.

I'm talking about behaviour. If you have an estate of a million, no IHT, but if you have an estate of £1.1m, you pay a whopping £40k. So there's a massive incentive to do "something" to avoid paying the £40k, i.e. lifetime gifts and hope to live 7 years, or invest £100k into a business, or set up a trust etc. Paying a professional, say, £10k to save £40k is a good deal and something someone would probably do.

If the IHT on £1m was £50,000 (i.e. first £500k tax free and then the second £500k at 10%). And the IHT on £1.1m is £60,000, it's not worth paying a professional £10k to save £10k in IHT - it'd be madness to do it!

That's what I mean about it being a behavioural thing.

Lower marginal rates often bring in more revenue because it's not worth the time and hassle to avoid. Higher marginal rates are often avoided because it's worth "doing things" to avoid them.

What is stopping the UK from emulating their system then? Ie create more medical schools, more medical school places, more training jobs etc etc. If the Philippines can do it and they don't even "need" the staff they train, why can't the UK do it?

We've been short of medical staff for decades. I once read that we started "importing" doctors in the 60s and 70s. Isn't 50 years enough for the UK to sort itself out? Why can't we train up more and then we won't be as bothered if "some" of them emigrate to work elsewhere.

If you are talking about more progressive tax systems with fewer cliff edges I’d agree. The U.K. has an awful lot of cliff edges and seems to keep making more.

Most people I know have the bulk of their money in their house so are pretty relaxed about some of it going on tax.

But perhaps lower marginal rates are a good idea.

Exactly. We've got it badly wrong when it brings in so little tax revenue. Most people don't pay anything because the thresholds are too high. Those with bigger estates don't want to pay a whopping 40% so take steps to reduce/avoid it. That's why I maintain we should have a lower threshold and a lower tax rate, to bring more people into IHT, but at low "cost" and disincentives the rich from bothering to take steps to avoid it when the cost of professional fees (and restrictions in use as a result of trusts etc) isn't worth the tax saved.

If you are talking about more progressive tax systems with fewer cliff edges I’d agree. The U.K. has an awful lot of cliff edges and seems to keep making more.

I would stop means testing CB & free hours childcare.

The only people who do not plan for inheritance tax and end up paying a lot are those with net assets between 1 million and about 3 million, or who have a completely unexpected death. Everyone with assets above 5 million plans around inheritance tax quite substantially and well in advance.

The vast majority of the population don't have assets above 5mill. And for those that do certainly some of them do pay significant IHT.

I was thinking more about the immigrants emigrating back out. As you say, UK trained medics have been leaving in droves for years.
I’m not sure UK trained medics send much money back home to support family members once they leave. So I don’t think it’s possible to emulate in quite the same way. The Philippines benefits from money coming into the country from its emigrant healthcare workers. I’m guessing we have different ways of getting people from outside the U.K. to invest money here and that investment is much bigger.

"According to figures for 2021-22, the top 40 largest IHT bills averaged £9.2m – meaning those at the top of the tree will likely have paid far greater. Titan’s FOI request revealed that 889 families were stung with charges in excess of £1m, including 67 estates where IHT exposure was greater than £4million."

Out of 600000 deaths, that is nothing. Vast majority of rich people plan around IHT. Yes some will stay in their big mansions because they want to so they end up paying and some have unexpected deaths. Or do not have direct descendants they want money to go to. But in most cases, rich people have children and plan their IHT years and years in advance so they do not pay anywhere as much as they would otherwise have to, if there were a inter vivos gift tax, for example.

Or widen the tapering bands etc., so that the "marginal" loss of benefits isn't quite so severe, especially the binary "yes/no" loss of free childcare when you go just £1 over the £100k cliff edge.

I've said many times on MN, I think there should be an over-riding limit of never "losing" more than 50% of your extra income, at ALL levels of income, encompassing both benefits and taxes. So that if you earn an extra £1, at ALL levels of earning, whether minimum wage, or £100k, you're no worse off by more than 50p and get to keep at least 50p of it. Make a statutory limit of 50% of "marginal" tax rate/loss of benefits rate.

If we could achieve that, and people knew they're never be worse off by earning more, we really could "make work pay" and get people back to work and part timers working more, which is the only way of getting back to decent levels of economic growth.

I've said many times on MN, I think there should be an over-riding limit of never "losing" more than 50% of your extra income,

agree

Trouble is, that if, say Filipino nurses are sending money "back home", then the UK isn't benefitting from their spending of public money. If we employed more UK born staff, they spend within the UK and that would benefit the UK economy. After all, they're being paid out of UK taxes paid by other people, as it's the public sector NHS. It would be different if they were here and being paid by private businesses etc. But the frequently quoted justification of higher pay for public sector wages (paid by the taxpayer) is that the money comes back to the UK in terms of taxes and spending.

@Araminta1003 I just simply disagreed with your comment that "Everyone with assets above 5 million plans around inheritance tax quite substantially and well in advance." because it isn't true unless you can show me otherwise?

Exactly. Why people care about paying tax when they’re dead is beyond me. What we really need is to change attitudes around paying tax. We’re never going to get decent public services until people understand that they need to be funded from taxation.

My in-laws & parents have houses well over 1m. My siblings & I are ok with paying tax on it if care doesn't take it. I don't understand the reluctance to do so tbh.

Usually it's only payable because of a "failure" of long term planning. I.e. someone dies too young before they've undertaken IHT planning, or they've got it wrong in some way (or their professional advisors have got it wrong).

I regularly look at the wills of people who've died, for example, and I'd say more than half the ones I've seen (Relatively "normal" people with estates of less than a couple of million - certainly no landed gentry etc - just people with a decent house and maybe a holiday home or a few but to lets, decent pension funds, a few investments, etc) have taken steps to avoid IHT by use of trusts, lifetime gifts, etc. thus paying nil inheritance tax.

I see VERY few cases where IHT is payable. Usually it's the ones who've died "early" and intestate without actually doing any IHT planning as they didn't expect to die, hence not even making a will!

Advising on IHT is pretty much "bread and butter" work for solicitors when advising on wills etc - even if they don't actually get instructed specifically, it's often in the "default" will template to include simple will trusts.

It's usually driven by the "giver" rather than the "receiver". Yourself and siblings may not be bothered and may not be "pushing" your parents/in-laws to plan their affairs to reduce/eliminate IHT, but they're probably doing it anyway as they'll be more aware of IHT etc than you are usually.

i haven't claimed that the richest don't try and avoid paying inheritance tax just that some do end up paying. I think I read it's about 25% that pay the full whack. But as I said the people with 5m plus estates are tiny in population terms.