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?

We can only hope

10% on everyone certainly seems fairer than 40% on ‘some’.

How long before the lefties demand that inheritance be taxed at the recipient's marginal tax rate, plus national insurance

But it’s not. Because it means those with millions pay much less than they should be paying.

Why "should" anyone be paying anything?

Under the current system more forms need to be completed if IHT is payable. Under the 10% scenario most estates would pay IHT and you would hope the paperwork would be simplified accordingly.

Posts like this is why I think it should be mandatory for people to study basic tax and economics at school as part of the maths curriculum.

Way more useful than learning about algebra.

Yes, that has been mentioned so many times…🧐

All inheritance is unearned

The opposite! I am paying huge amounts of tax on my earnings so I would like to give it away to who I want on departure and not then be subject to some ridiculous tax that ultimately means my original earns have been taxed at an effective rate of c75%. The UK is a real outlier on IHT

Despite all the economic research on the proven failure of increased high tax measures across the board to improve living standards and growth, this stupid government is determined to do all the things to kill industry, growth and confidence, led by that massive nob Gary Stevenson, who doesn’t actually know the basic difference between assets and income

Perhaps it should be the same as income tax - a sliding scale.

I'm not sure why people fawn so much over those inheriting millions they've done nothing to earn. It's yours til you die (or have to sell it to pay for something) but your children/ grandchildren/ siblings/ cousins/ great grand nephews haven't earned it and are lucky to inherit 60% of it.

There's no reason anyone who isn't resident in the property and the spouse or dependent minor/ in full time education child of the deceased shouldn't pay tax on smaller estates either - equally they haven't earned anything and are lucky to inherit, it's not a devine right and 10% tax on anything above what's needed to settle funeral etc expenses is perfectly reasonable.

Inheritance is unearned income in terms of the recipient.

What you'd like doesn't change the fact that anyone you leave it to hasn't earned it.

Tax has been paid on all money at some point. You not wanting your heirs to pay tax shouldn't make the slightest difference to the fact they should have to. They didn't earn it.

Plenty of people inherit property they could never have afforded to buy, and which the deceased couldn't have bought at current prices either, but don't earn much themselves (or don't earn much any more because they're pensioners) therefore don't pay much income tax. It should be on property value.

Plenty of people these days inherit from their parents when they've already retired, especially if they retire early. Some people never work much and live off benefits and their parents and inherit a grandparent's house. No reason they shouldn't pay based on property value.

Not really a "stupid comment". Taxes are a method of encouraging or discouraging behaviour, eg tax on cigarettes. IHT raises very little so it's not really a method or raising tax revenue

With limited number of houses therefore you may want to encourage older folk to move out of their big houses into something more appropriate, freeing up space for younger bigger families Similarly a pile of cash in the bank isn't very good for the economy, if it was spent it stimulates economic growth.

IHT encourages both of these things, ie discouraging undesirable behaviour. If you want to own 3 expensive houses in your 80s, then that's fine, in the same way that people own expensive thirsty cars, or continue to smoke. As the poster said IHT is a tax on hoarding

You may think that IHT is theft, but on that basis all tax is theft. I've worked for my money but the government is taking 40%, or even 45%. I've paid tax on my earnings, and then there's another 20% VAT (a much bigger tax generator). I've paid tax on my earnings bought some shares and I have to pay CGT on their growth. It's all just a way of generating tax revenue. The key is whether they encourage or discourage effectively.

????
think you have your wires crossed
I was responding to a suggestion that labour will soon want inheritance to be taxed at the recipient’s marginal rate plus national insurance.

I understand that - I wasn't arguing with you, I just quoted you to argue with the idea, so I think wires got very tangled at both ends there. I apologise for lack of clarity!

IHT is the most unfair tax. First people have already paid tax on their money when they earned it and secondly it penalises people who save rather than spend.

The possible proposal is a 10pc flat rate upto an estate of £2m and 20pc above this.

So I don't think it will completely eliminate structuring and tax avoidance at the high end. I'd also be extremely concerned that those thresholds never ever changed so more and more people got dragged into the higher end.

Finally it would be very tempting for future governments to increase that 10pc to 12pc etc so creep would be a risk.

I'd rather see it just abolished entirely to be honest. It does not raise that much.

Apologies from me too - well and truly tangled!

Any timeframe?

not sure it’s the most unfair tax…2% more tax for savers next year. That is penalising people who save.

Graded taxes are usually fairer I think?

. Someone with no savings and getting a 50k inheritance losing 5k will be big hit

getting a 500k inheritance and losing 100k instead of 50k - well you are still wildly rich

It doesn't penalise the person that's saved. They have all of their savings right up until they die. They really don't need any money afterwards!

It penalises the recipients who get something for free that they haven't worked for.

If you have saved during you life and you want to give some of those savings away, then do it sooner rather than later. Giving someone £50k when they are 30 so they can put a deposit on a house is a lot more useful than them getting £100k when they are 60 and you die. IHT encourages exactly this behaviour.

I would rather he closed loopholes and similar for people very wealthy so they cannot get away with paying nothing and ordinary people for whom £10,000 may be a lot proportionally and comparatively.
I would resent paying more than a millionaire.

Wouldn’t Grandma who worked hard all her life, managed to buy her (bargain price) council house in 1970. Have to fork out 10% of eg £600,000 -means the property will have to be sold to raise the £60,000 - lots of sob stories etc ensue -plan is dropped

You are right and I expressed it poorly.

It penalises the philosophy of saving to benefit your descendants. Foregoing luxuries perhaps to enable your children or grandchildren to get a foot on the housing ladder.

I think it's very natural for many people to want to do this and it should not be discouraged or disadvantaged by the tax system.