Inheirtance tax of 10%

[PropertyD]

Whilst I think Burnham is not going to be the answer to anything really I have heard that he is thinking of scrapping inheirtance tax and just putting 10% on everyone’s estate. I don’t think this is bad idea at all.

The very rich don’t pay very much if anything and clearly 10% on a £100k estate is not a huge amount and it just seems fairer if this happens. No 7 year rule, no trusts, no complicated set ups.

Anyone think it’s really going to happen?

How much will it really raise?

10% on everything and no allowance?

I'm not sure trying to squeeze the same people is a good idea. Get more people paying tax. More companies paying tax.
Less people needing support.

Google (alphabet now) is an international company that has a UK based subsidiary. It's UK subsidiary pays taxes in the UK, and I'm sure their tax computations are squeaky clean.

However by virtue of being an international company they can set up their business in a tax advantageous way. So they also have a subsidiary in Bermuda that owns their intellectual property, other Google subsidiaries like the UK one pay for the use of that IP, reducing taxable profits in the UK, and increasing profit in Bermuda where there is zero corporation tax.

A report in the guardian estimated that in 2017 profits of $23bn were shifted to Google's Bermuda subsidiary some of these profits were made in UK, so this is a very big deal.

It's not illegal, and would take concerted agreement across the governments of different countries to address. Being part of a big powerful block like the EU may make it easier to put rules in place to reduce such practices, but the clever people of the UK decided against that.

i think it makes sense & people will
likely try to avoid it less so more will pay.

Well, not by definition - every international company is registered somewhere so being international doesn't mean non UK automatically.

There are obviously British multinationals who dodge UK tax www.taxwatchuk.org/the-great-pharma-tax-giveaway/
as well as non UK multinational corporations which take incentives from the government and are enticed with tax funded investment in infrastructure but are registered in low tax countries purely for tax avoidance.

No, because very small estates would be exempt from probate just as they are now.

Everyone else has to apply for probate just like they do now, and so nothing will change.

Yes exactly this - legal tax avoidance costs billions, vastly more than the scapegoats various political parties and media outlets prefer to point the finger at.

Sorry for being dim, but I don't understand what people are saying about removing the the 7 year rule?
Do they mean someone's estate would simply everything they possess on the day they die? Regardless of when and what they gave away previously?

And if not, what would the definition of a person's estate be?

Will they be exempt. We don’t know

@Philgooglemail

It's not illegal, and would take concerted agreement across the governments of different countries to address. Being part of a big powerful block like the EU may make it easier to put rules in place to reduce such practices, but the clever people of the UK decided against that.

Irrelevant point because the EU hasn't tackled it.

there would be a considerable change in amount of paperwork to be submitted if all estates (except the very small) paid 10% IHT.

I’m more in favour of scrapping IHT and taxing the transfer of all assets between people (CGT) so if a house is transferred to anyone other than a spouse, it is taxed for any capital gain. That any money transferred after death is subject to income tax at the marginal rate.

But…all gifts of assets and cash eg from parent to child, should be similarly taxed as well, with a reasonably generous annual, or lifetime allowance.

This is because at the moment, if someone owns 3 properties and sold them a day before death, there would be CGT on the gain for two, then IHT. One day after, all the CGT is forgiven.

For most people their main asset is their home and they need it to live in. They can’t gift their children. The rich people have enough wealth to gift children and keep enough money.

So excepting between spouses, if you bequeath assets to anyone other than your spouse, it is taxed as CGT, or extra income tax by the recipient. If you gift money or assets to anyone other than a spouse throughout you life, CGT or extra income tax is paid.

we are about to have (and have started) one of the biggest movements of wealth between generations. It will very much widen the divide between the haves and the have nots - this is a bad thing on a societal basis. It doesn’t mean children won’t get any help from parents, just that society will tax that help and spread it about.

I think you're referring to the Laffer curve. The idea that lowering tax rates encourage people to work harder, and also to not avoid tax, so the total tax take goes up.

It's a nice idea but has been comprehensively demolished, it's simply not true, it doesn't happen.

Tax rates went up under the Tories (mainly due to higher vat rates and also fiscal drag, where the boundaries between tax rates don't go up with inflation). Under your suggestion that should mean the total tax went down... It didn't. Total tax as a percentage of GDP hit it's highest ever level under Sunak to be fair to the Tories it's scheduled to continue rising under labour.

The reason for this is twofold (1) GDP growth under the Tories was terrible. The economy barely grew due to their policy of austerity. And the disaster of Brexit of course. And (2) we have an ageing population. 20% of government spend goes in the state pension and 25% on the NHS which are both related to the elderly. Bothe of these are paid out of current taxes and are rising fast. Benefits to immigrants and unemployed "scroungers" are tiny in comparison.

We basically need more working age people paying taxes to finance these 2 big drains. As women in the UK are having 1.5 children we need to significantly increase immigration to compensate. Genuinely loosening immigration controls would be the most sensible thing Burnham could do for the economy. But of course he won't because of all the Reform loons.

This!

It makes no sense at all as a Labour policy. Currently under 5% of estates are liable for IHT. It's a tax most people don't need to worry about at all. Would Labour really extend this tax to the other 95%? Average people with average (or below average) savings/property?

How is this "scrapping inheritance tax"?

Surely it's just reducing the rate but taxing all estates rather than just the richest 5%?

I’ve maintained this is a good idea for a long time - a flat tax above a certain minimum amount. Loads of people, for some daft reason, think they’ll have to pay IHT (or rather an estate they’re due to inherit from will). The truth is the vast majority will not. So if they ‘think’ they’ll get hung for 40% (and won’t) why not reduce it to 10% (and actually have them pay it). Improves the tax take and sounds like a 75% reduction to those who won’t even realise they’d never have paid it in the first place under the current system.

Bad idea.

We've got enough part timers/no-timers already. Get people working.

As PPs, I’m a bit concerned about the administration of this.

It could also give people that rent with small estates a lot of extra worry at a time when they don’t need it

Maybe you're right! Make 95% pay more while thinking they're paying less. Meanwhile the top 5% are happy because they've had a genuine tax cut.

EU anti tax avoidance directive already implemented and part 2 in the process of being implemented.

https://www.google.com/url?sa=t&source=web&cd=&ved=2ahUKEwj77di-tciVAxWuR_EDHf42HOEQFnoECBwQAQ&url=https%3A%2F%2Ftaxation-customs.ec.europa.eu%2Fdocument%2Fdownload%2F325d58ba-3829-4a42-bf0c-9acf300e4a04_en&usg=AOvVaw2s7p05wokJGfgKHhhRY4WP&opi=89978449

Yes, they would be as the cost of obtaining probate for a small estate is too much.

Probably anything under £10k would be exempt.

Unless it has changed since my DF died in Spain, they have no IHT threshold, the whole estate is taxed on a perventage sliding scale. So the higher the estate value the higher the percentage due. I don't know how they treat gifts though as my DF never gave any.

But when you apply for probate you have to give the value of the estate, so what would change?

While I agree that they should have planned better to avoid the ridiculous 40% theft of their estate, since when did hoarding become some sort of slur for people who dare to have more than one of anything? What a stupid comment.

The ‘Royal Family’are not exempt.
Only monarch to monarch.
So for example when the King dies he will pass the vast bulk of the estate onto William- monarch to monarch.
When Camilla dies everything she leaves to her children & grandchildren will be subject to IHT at the same rate as the rest of us,
.
This is why when Princess Margaret died her children sold off a lot of her estate. She didn’t own any property but had lots of ‘stuff’ - art, jewellry, etc which was auctioned off so her children could settle the IHT bill .