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?

If we buy the white goods for a house we live in while househunting, that's entirely legit. We are taking cash from our estate to pay. The figures are fairly trivial even in total. £4k max?

@Philgooglemail thank you. I have enjoyed this thread and find a lot of what you have posted really interesting.
I know that people have really varied views on IHT but whatever perspective people have, it’s always interesting to have measured, informed posts on here.

You do presumably know that left wing parties (labour and the democrats) tend to be better for the economy than the right? GDP per head of population tends to rise faster under the left (at more than its long term trend of 2% pa) and slower under the right.

The 14 years of the Tories were particularly bad for gdp growth - which as any A level economics student would tell you was no suprise because under Cameron & Osborne's policy of austerity they stopped spending so the entire economy shrunk, or grew very slowly, and in turn tax revenue shrunk.

However under the left the fiscal deficit tends to shrink, so the left tends to run something closer to a balanced budget whereas under the right taxes fall and the deficit increases.

It's easy to demonstrate - when Cameron took power in 2010 the country's total debt was approx £1trn. Their objective was to reduce spending and reduce this debt. They totally failed, total debt grew to £2trn by 2020 (pre COVID). And in the meantime public services crumbled.

So if anyone is a fiscal hawk and wants the country to run a more balanced budget they should vote for the left. The fact that you also tend to get improvements to public services, a less polarised society, less inequality, a more caring and compassionate society is just a nice little bonus.

Genuinely the right are terrible for the long term health of the economy. If the Tories are not good for the economy then it begs the question "what are they for?".

And why should the state have it?!

Well done on cherry picking a period in our history immediately after a global financial crash to attempt to demonstrate your point.

Id love to see your evidence that left wing parties are better for the economy in the UK.

Here you go, someone that knows more than most of us about economics, Simon Wren Lewis, a professor at Oxford and one of the most respected economists working on the UK. He's looked at the past 40 years and concluded the the conservatives are "terrible" at running the economy.

https://mainlymacro.blogspot.com/2021/03/why-are-conservatives-so-bad-at-running.html?m=1

At what amount will the 10% become advantageous to people over the 40% that people pay now

Yet this research concludes there is no meaningful difference. Research eh?

https://theconversation.com/have-labour-or-the-conservatives-run-the-uk-economy-better-in-the-past-50-years-new-research-233370

I'd be interested in the provenance of the research, it doesn't seem as detailed as wren-lewis's. But even if it's accurate and there's no difference economically between the parties then:

(1) that destroys the right wing press stance that Labour are terrible for the economy, which has been their constant theme for around 40 years.

(2) If their performance on the economy is the same, then surely it's better to vote labour as you get the same economic performance but also investment in public services, more social cohesion, less racism, better safety nets etc. Remember it was Labour that set up the NHS.

{3} if we hadn't voted in the Tories we wouldn't have had Brexit (which was entirely about the Tory party, not what was good for the UK). This alone should be enough to stop anyone voting for the conservatives or reform for a generation.

Anyone with assets more than the nil rate bands would benefit from this lower rate. The nil rate band is currently £325k and residence nil rate band of up to £175k, so £500k.

I can’t find anything more than headlines on it, but presumably he would intend to scrap agricultural and business reliefs, conditional exemptions, etc, so individuals with those types of assets may be worse off.

For married couples leaving their estate including their main home to their children or grandchildren, they'd be worse off for estates under £1.33m, better off over that.

At the moment they'd pay no IHT on an estate under £1m.

No one with more money will be better off, a Labour government will make sure of that.

Which in turn replaced estate duty which was introduced in 1894. It was 80% post war.

I don’t disagree but all he’s said for now is a flat 10% so that’s what I’m going off.

Tbh from what I’ve seen I don’t think Burnham has a very good understanding of the economy/finances/taxes.

No-one pays nothing. If you put money in a trust, you pay 6% of the amount in the trust to the government every 10 years. Any money taken as income from the trust is also taxed at the usual UK tax rates. It’s not some kind of tax free piggy bank. If it was, everyone would be doing it.

Well, I wish I could be sure that what you say is what everyone does.
There are far too many people who do not pay what they should though.

Cameron and Osborne put vat up to 20%, gave us Brexit and also the slowest growth in GDP per capita making everyone worse off. The Tories are the ones who make sure we all end up poorer, not Labour. Whereas under Blair the economy boomed, public services were better and taxes were broadly stable.

It's daily mail scaremongering to suggest that labour make everyone except those on benefits poorer. It's simply not true.

There were very high taxes (under labour and conservatives) back in the 1960s, but that's 60 years ago.

As one example - just look at what the Tories did with local government. Cameron and Osborne reduced the central government allocation to local councils by around 50%, that meant that your council tax went up by more than inflation to compensate, and services got worse as they had to cut costs. More potholes, playing fields sold off etc. effectively a stealth tax from the Tories accompanied by gradually worsening public services.

This. At the moment, the very rich and the very poor pay no IHT. It’s all loaded on the middle, and we’re getting sick of paying for everything. And I say that as a lifelong labour voter.

It's not loaded on the middle though. Only 5% of estates are liable for IHT. It's not just the "very poor" who don't pay - it's almost everyone!

That's just showing GDP fuelled by debt.

I really don't think it is debt fueled GDP growth, and even if it is, surely that's a good thing, like buying a house, if we borrow to improve roads and railways and that causes economic growth sure that's a good thing. The key is the level of debt to GDP which is what the markets will consider when assessing our credit rating.

Here's a chart of debt to GDP, which is pretty much flat under labour until the GFC. Even if debt did grow it was supported by growing GDP. Under the Tories it rose significantly (despite austerity) which is no surprise as austerity caused GDP to stagnate, meaning the country had to borrow more to support rising spend on the NHS and state pension.

I genuinely can't think of any way the country was in a better place after 14 years of the Tories. And I can't think of any economist who thinks the last Tory administration was economically good for the country. So like I said "if the Tories are not good for the economy then what are that actually for?"

Why should anyone, once you've died?Nobody is suggesting 100% inheritance tax... All income (over the very low minimum) is taxed, and this is unearned income for the recipient.

That is exactly what I did. When I was 61 (DC 24 and 33) I downsized to a 1 bed future proof bungalow and have given both DC lump sums when they have needed it since then. If the government scrap the seven year rule and I die in the next six years those gifts will be added to my estate and taxed.

Exactly. The state needs money to pay for public services. It has to come from somewhere.

It's great for your children that you did this, but it's not the norm. Most don't.