Does anyone think that the Tory plans to increase inheritance tax are a good idea?

[morningpaper]

Just curious really.

Apparently the rate is actually £2 million for couples (e.g. 1 million each).

Particularly if the wealthy can pay £8k at retirement in order to ensure that they won't have to sell their house to fund any residential care (I do think that anyone who can easily do that is reasonably wealthy).

This means that more LIVING people will have to pay tax because we aren't taxing the dead anymore.

Why IS this such a popular idea? I don't understand.

Can someone please explain to me what the £8k is that is referred to here. Thanks

I do still think that even 650k is probably enough for most dependents to live on, surely?

The £8k contribution is wat it is proposed people will pay at 60/65 and then be guaranteed free care in old age. They don't have to pay up front but can have a charge placed on their home so when they die/sell the house, the money gets paid then.

I don't think the limit should be raised, but I DO think it should only apply if /when you want to sell the house you've inherited. It seems unfair to have to sell a house that you wanted to live in just to pay the 40% tax.

This is also why I think the LibDems idea of a tax on houses worth over £1 millions is also a crap one - just because your house is worth a lot, doesn't necessarily mean you have loads of ready cash.

Stressed: "The Conservatives have promised their own social care package, a scheme by which people could pay a one-off fee of £8,000 at the age of 65 to enlist into, guaranteeing them residential care when they needed it." - Basically people at 65 can pay 8k and be guaranteed care without having to sell their homes to pay for it

It certainlywasasurprise, I am serious when I talk about the scheme in which the seriously wealthy don't pay IHT but donate a painting to the nation instead. So your stereotypical old-Etonian wouldn't pay IHT on the family pile anyway.

I do in a way, it'll benefit me and my daughter so it's hard to disagree with it too much but from a policy perspective, no, I think it's rubbish. It is fairly clear that they should keep IHT

the way it is AND chase the non-domicile taxes too.

Sorry for disjointed message, laptop posted for me.

www.culture.gov.uk/reference_library/media_releases/6083.aspx

here

Well, I think it has something to be said for it.

The reason why it could be a good political idea is that it is an aspirational tax. You don't know when you are going to die, but you would like to think that when you do, you will be rich enough for it to apply. So even though inheritance tax affects only a minority of estates it bothers the country more than you might expect.

An IHT rate of 40% sounds quite high and almost certainly means that if the estate is comprised of one substantial asset it will need to be sold. Which means that one of (for example) a pair of sisters who have lived together all their lives may need to sell their home when one of them dies. In this case obviously a spouse exemption is no good. Ditto if a son/daughter has cared for parents in the family home for a substantial period of time. And in such situations this can easily hasten the second death .

IHT requires, for estates that need to pay it, a substantial amount of paperwork for the recently bereaved, or a substantial bill from a solicitor to sort it out.

As far as I can see there are three simple options to sort this out. The first is to levy IHT on everything, but at a much lower rate (say below 10%) which means it is not worth trying too hard to avoid it, and it may be possible to save/afford insurance to pay the tax on death. The second is to abolish IHT altogether and replace with a wealth tax on the living (say 0.5% of total wealth above £200k per year) - this would probably be a lot of paperwork, and the third is to raise the limit quite high so that it stops being a burden to all but the wealthy who can afford professional help to sort out the paperwork, and it stops 'the country' from collectively fretting about it.

Always taxed unless it has been written in trust and then outside of the deceased's estate

That I thought was the purpose of the death in service

so that it was outside the estate and tax free

Who ever I nominate gets a lump sum tax free

?

your nomination should in effect be a trust document and should take it outside your estate

Many, many people take out private life insurance - they don't write policy into trust and then when they die it forms part of their estate on which they are charged IHT

" contribution that people will pay at 60/65 and then be guaranteed free care on old age. They don't have to pay up front but can have a charge placed on their home so when they die/sell the house, the money gets paid then"

Great idea but hoiw does that affect whether you would pay IHT on your estate?

No, I can't believe at a time when the Tory party are talking about a pay freeze for public servants earning over £18k, they are also proposing a reduction in inheritance tax on the very wealthy.

I don't think it does have wide support,mp. It's just supported by a lot of journalists.

I think they should decrease the allowances myself, although they should allow children to live in (not rent out) the family home without paying anything.

It does not make sense to increase the allowances. only 6% of estates pay as it is.

as for this
[quote]Because the money people accumulate during their lifetime has usually already been taxed[/quote]. actually most wealth hasn't been taxed as it is mostly due to capital gains on property and assets. and even if it had been: taxes happen when money changes hands right?

"they are also proposing a reduction in inheritance tax on the very wealthy."

"only 6% of estates pay as it is."

I think this very much depends on where you live. In North London a 3 bed 1930's semi will cost you 500K so really practically everyone round this area would be paying IHT when they die if they have paid mortgage off by their old age.

but not "practically everyone" owns a 1930s 3 bed semi, stressed. the average house price even in London, is £260k.

??? where is that statisti cfrom? We live in enfield (nice enoough but not super great area) and our small 2 bed flat (galley kitchen and no garden) costs more then that

It's taking the rough with the smooth. "Everyone" who owns a 3 bed semi in N London worth £500k has an asset worth £500k. I'd be prepared to be very few of them are actually paying a £500k mortgage. The capital gains they have made are free money that hasn't been earned or taxed.

bbc website

plus of course lots of people don't own property at all, and those who do often trade down in old age

"The capital gains they have made are free money that hasn't been earned or taxed."

I apprecite the point but most of my friends who have bought in last 5 years at these huge prices are basically over the IHT level when they buy the property. It makes no difference if the property is 500k and goes up to £1m in next 10 years as basically they will be caught with the IHT issue when they buy the property to start with - the gain they will make will not affect the fact they would have to pay on the purchase price of the property (i.e. the start price) and not the gain.

I apprecite the point but most of my friends who have bought in last 5 years at these huge prices are basically over the IHT level when they buy the property.

If most of your friends are buying property over 650k then your friends are extremely exceptional in the earning stakes.

Lenin, they haven't made it clear (at least I can't find it) whether the transference of £1 will apply to civil partnerships. They've avoided the issue as far as I can see.