Inheritance Tax

[Buster15]

It's the too easy to avoid thing that annoys me. Anything that improves on that aspect will get my support.

I am lucky enough (and I do mean lucky - free university education, good jobs, lucky with house price inflation etc) that my family will pay IHT when I die. Good - they're sharing a bit of my lucky life and if it's not as big as it would have been without IHT that's ok.

I understand why people don't like it. It's the same reason we don't like writing wills or listening to family members talk about their funeral plans. A lot of people have an emotional reaction to IHT, even those who are unlikely to have to pay it and those who won't be passing on enough that the family will pay any. But personally I see it as one of the easier taxes to pay as no one ends up in a worse financial state after paying it.

This is probably the first post I have read by someone who says that his family will most likely have to pay IHT when he dies, because of the size of his estate.
And he is fine with that.

So many people pontificate about how wonderful IHT is, giving all sorts of opinions on how it should be applied, even though they know they it doesn't or won't apply to them.
Because of that, I take little or no notice of what they are spouting.
It is so easy to say things when we know it won't have any effect on us.

So well done for saying what you have said.

 

[Fingeredmouse]

This is probably the first post I have read by someone who says that his family will most likely have to pay IHT when he dies, because of the size of his estate.
And he is fine with that.

So many people pontificate about how wonderful IHT is, giving all sorts of opinions on how it should be applied, even though they know they it doesn't or won't apply to them.
Because of that, I take little or no notice of what they are spouting.
It is so easy to say things when we know it won't have any effect on us.

So well done for saying what you have said.

Leaving aside the fact that people are not habitually declaring their exposure to IHT or not, are you stating that people can't have an opinion on taxation policy (or "spouting" as you call it) unless they know that they'll be subject to that tax? What's the reasoning here?

 

[Kinsella]

Firstly, there is no apt use for using ‘virtue-signalling’ - it’s just like someone trying to make an argument and basing it on ‘woke’.

(a bit like 'privilege’ perhaps )...

You must have a problem with the actual phrase then and its use in the modern digital age, as opposed to the human behaviour it describes. Because the latter has been around forever.

Secondly, regarding the charitable contributions of @Maticmaker, I’ll remind you and him of the following:

Charity is a cold, grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.

I'd take someone who puts their concerns into action any day over someone who puts theirs into words and rhetoric.

 

[Jippy]

Leaving aside the fact that people are not habitually declaring their exposure to IHT or not, are you stating that people can't have an opinion on taxation policy (or "spouting" as you call it) unless they know that they'll be subject to that tax? What's the reasoning here?

They can have an opinion of course, but it's easier to be for a tax that will never affect you or your family. The fact that this government is arguably the vilest in living memory doesn't help either.
jo hits the nail on the head - if you're going to have IHT apply it properly across the board- at the moment it mainly catches the unaware and people unfortunate enough to die earlier than expected, while all the uberwealthy who it's aimed at don't pay a cent.

 

[Jericholyte2]

(a bit like 'privilege’ perhaps )...

You must have a problem with the actual phrase and its use in the modern digital age, as opposed to the human behaviour it describes. Because the latter has been around forever.


I'd take someone who puts their concerns into action any day over someone who puts theirs into words and rhetoric.

I very much have the issue with the modern tendency to use it as a pejorative, and if you read my latter reply to Maticmaker you'll see I’m also very active on this issue too.

 

[Buster15]

Leaving aside the fact that people are not habitually declaring their exposure to IHT or not, are you stating that people can't have an opinion on taxation policy (or "spouting" as you call it) unless they know that they'll be subject to that tax? What's the reasoning here?

The reasoning was perfectly simple.
I was commenting the poster for their honesty and saying that I don't take much notice of the others.
They are perfectly entitled to post whatever they like.
I just don't take much notice of them.

Edit. This is specifically in relation to taxation where some people are happy to say how others should be taxed knowing it has no effect on themselves.

 

[golden_blunder]

If they were smarter/cynical, then the parents (or owners, I haven't read the article but presume parents are the owners), should move out of the property, and gift ownership of it to their younger family members. As long as they live 7 years or more they would pay no IHT on the property. Even if they lived 4-6 years the rate would be reduced. Most super rich individuals avoid or massively reduce inheritance tax with some forward planning, and thats just the ones doing it above board. Why does someone 70 or 80 years old, who is long retired, need to live in a £9m mansion? Is a 500k, £1m or even £2m property not sufficient? When large swathes of the population are living pay cheque to pay cheque, or desperately scrambling to save a few quid to buy a small flat or terraced property? They know or should know the law (or can certainly afford financial advisors who do), they choose to continue living in a £9m property rather than downsize and gift it. Their family will still be inheriting likely £5m +, which is more than enough for a family to live comfortably, not work, accrue passive income and continue passing wealth down to future generations.

I think a wealth tax (or assets tax/mansion tax) might be a better method of wealth distribution than IHT, but the idea of scrapping IHT without a similiar replacement is abhorrent. Also its irking that 99% of the Daily Mail readership will never own a £9m property or inherit £5m, yet they will not only sympathise with the family in this story, but actively support abolition of a tax which indirectly benefits THEM. It just shows that a small, wealthy % of society can propagandise and influence large sections of the populace to support politics and systems which keep them in wealthy and privileged positions, and not only maintains but increases the wealth disparity. Folks who earn a decent wage, call it 50k or 100k depending on region or personal perspective, are tricked into thinking they're the beneficiaries of Conservative politics when they absolute aren't. Maybe they work 50. 70 hour weeks, spent years investing in their education or professional development, and they are tricked by the work hard mantra. They are pawns. Real wealth is in assets and passive income. Wealthy people don't need to work, and asides from a small % of LinkedIn productivity wankers the majority of them don't.

Parents are dead now. Sisters still live in the house. Tbf they seem more distressed that the new owners are going to demolish it

 

[Wibble]

No inheritance tax here thankfully. We have paid hundreds of thousands of dollars income tax and GST (VAT) over the years and I've consistently voted to pay more income tax against my personal self-interest. But I'd hate an inheritance tax. OK if we are talking about taxing extreme wealth but it sounds like it targets much poorer people in the UK. Leaving the wealth to avoid it legally anyway.

 

[Mike Smalling]

No inheritance tax here thankfully. We have paid hundreds of thousands of dollars income tax and GST (VAT) over the years and I've consistently voted to pay more income tax against my personal self-interest. But I'd hate an inheritance tax. OK if we are talking about taxing extreme wealth but it sounds like it targets much poorer people in the UK. Leaving the wealth to avoid it legally anyway.

The first £325,000 is tax free in the UK. How does that target much poorer people?

 

[Wibble]

The first £325,000 is tax free in the UK. How does that target much poorer people?

Woot. What is that? Half a 2 bed flat in London?

My objection is that it is double taxing. I paid tax on what was then used to accumulate a little something to pass on. To then have it taxed again putting my son on the same no-win path is terribly unethical. Doubly so if the family property had to be sold to pay the tax.

If the threshold was higher or maybe if there was a total exemption if a primary residence was passed down and used for non-investment purposes for (say) 5 years, then I'd have less issue with it.

 

[hodgey123]

I am likely going to have to pay this tax soon for my Mum's estate and then her share of her dad's, who is likely to outlive her. I have no problem with it and wish the rules were tighter to prevent rich people avoiding it (I work in tax and see this regularly).

 

[cafecillos]

My objection is that it is double taxing.

Look, we can debate whether it's fair or not, whether it needs to be reformed or scrapped or whatever (I'm a huge advocate of IT even though I'm going to have to pay quite a lot of it, later rather than sooner hopefully, as both my partner and I are only children and we'll get more or less everything there is to get), but let's be absolutely clear here, it's NOT "double taxing". In fact it's probably the clearest tax in terms of the uniqueness and specificity of the taxable event. This taxable event (the mortis causa transmission of ownership) is obviously not taxed by any other tax, so no, no double taxing. I understand it may be a bother to some, but there's no need to not be rigorous.

 

[Wibble]

Look, we can debate whether it's fair or not, whether it needs to be reformed or scrapped or whatever (I'm a huge advocate of IT even though I'm going to have to pay quite a lot of it, later rather than sooner hopefully, as both my partner and I are only children and we'll get more or less everything there is to get), but let's be absolutely clear here, it's NOT "double taxing". In fact it's probably the clearest tax in terms of the uniqueness and specificity of the taxable event. This taxable event (the mortis causa transmission of ownership) is obviously not taxed by any other tax, so no, no double taxing. I understand it may be a bother to some, but there's no need to not be rigorous.

The income that bought the asset has already been taxed so quite clearly double taxation. Saying it isn't double taxation because the dead person isn't paying the second lot of tax is meaningless exceot as a way for givernment to tax those not at the top end of town. Tory politicians will love it as they can afford to avoid it. VAT/GST is double taxation but neccesary as it is hard to avoid. Inheritance tax raises feck all revenue and fails to target the truly wealthy so further impedes economic mobility. So is is inequitable, pointless and double taxation, especially when applied to the family home.

 

[cafecillos]

The income that bought the asset has already been taxed so quite clearly double taxation. VAT/GST is double taxation but neccesary as it is hard to avoid. Inheritance tax raises feck all revenue and fails to target the truly wealthy so further impedes economic mobility. So is is inequitable, pointless and double taxation, especially when applied to the family home.

Sorry but no, you're just ignoring the legal definition of "double taxation" and "taxable event". Also you subsequently mention VAT as an apparently acceptable example of double taxation, which is, quite frankly, ludicrous. Just to be absolutely clear, the "income" and the "taxable event" are 2 entirely different concepts, which coincide for some taxes like the income tax, but remain unrelated elsewhere. Again, it's okay to oppose the tax for a variety of reasons, but if we are going to do it by using very clear and unequivocal legal terms incorrectly then the debate is simply useless.

 

[Fingeredmouse]

They can have an opinion of course, but it's easier to be for a tax that will never affect you or your family. The fact that this government is arguably the vilest in living memory doesn't help either.
jo hits the nail on the head - if you're going to have IHT apply it properly across the board- at the moment it mainly catches the unaware and people unfortunate enough to die earlier than expected, while all the uberwealthy who it's aimed at don't pay a cent.

Sure, but the issue there isn't IHT itself but loop holes in the tax system and a shitty government.

 

[Murder on Zidane's Floor]

No inheritance tax here thankfully. We have paid hundreds of thousands of dollars income tax and GST (VAT) over the years and I've consistently voted to pay more income tax against my personal self-interest. But I'd hate an inheritance tax. OK if we are talking about taxing extreme wealth but it sounds like it targets much poorer people in the UK. Leaving the wealth to avoid it legally anyway.

It doesn't target much poorer people. If you're parent have more than half a mill in cash, housing or assets, you're not "poor" ffs

 

[Murder on Zidane's Floor]

The likelihood is my fecktard future children will most likely spunk the money on some crypto scam, so IHT is fine by me.

 

[Fingeredmouse]

The reasoning was perfectly simple.
I was commenting the poster for their honesty and saying that I don't take much notice of the others.
They are perfectly entitled to post whatever they like.
I just don't take much notice of them.

Edit. This is specifically in relation to taxation where some people are happy to say how others should be taxed knowing it has no effect on themselves.

I'm not sure why not being fortunate enough to hit IHT thresholds means that a person's opinion on the tax should be ignored, nor how you (or even the posters in many cases) know whether they are likely to be subject to the tax or not to decide whether to disregard their opinion or not. I don't really understand, but fair enough.

 

[Fingeredmouse]

The income that bought the asset has already been taxed so quite clearly double taxation. Saying it isn't double taxation because the dead person isn't paying the second lot of tax is meaningless exceot as a way for givernment to tax those not at the top end of town. Tory politicians will love it as they can afford to avoid it. VAT/GST is double taxation but neccesary as it is hard to avoid. Inheritance tax raises feck all revenue and fails to target the truly wealthy so further impedes economic mobility. So is is inequitable, pointless and double taxation, especially when applied to the family home.

The issue then is surely the fact that the wealthy can avoid the tax, not the concept of the tax in of itself.

 

[golden_blunder]

It doesn't target much poorer people. If you're parent have more than half a mill in cash, housing or assets, you're not "poor" ffs

If you want to live in your family home and not sell it off, you might not be able to afford IT

 

[Murder on Zidane's Floor]

If you want to live in your family home and not sell it off, you might not be able to afford IT

Sorry if the family home is £750k without mortgage/debt and you inherit it, you have a £100k IHT bill, which can be paid over ten years, with interest back to HMRC or you can just get bridging finance to cover/remortgage the property.

£100k to then have a £750k asset, so net wealth increased by £650k.

If you can't afford £100k, with financing, with all due respect how are you going to be able to afford the running costs of a £750k house?

I don't get this argument that people are selling family homes? If they're several million in value I get it, in which case then you still get a huge wedge of cash post tax.

 

[Mike Smalling]

If you want to live in your family home and not sell it off, you might not be able to afford IT

Couldn't you just refinance in most cases? If your parents leave you a £600,000 home, and you have to pay inheritance tax of the share above £325,000, then the tax comes out to £110,000. You are still £490,000 better off than you were before. You might have to pay the tax in cash, when taking over the home, but presumably a bank would be happy to step in and provide you a mortgate secured against the much more valuable home.

Maybe this is overly simplistic. What are the cases where the inheritance tax forces a family into an untenanble housing situation?

 

[Murder on Zidane's Floor]

Couldn't you just refinance in most cases? If your parents leave you a £600,000 home, and you have to pay inheritance tax of the share above £325,000, then the tax comes out to £110,000. You are still £490,000 better off than you were before. You might have to pay the tax in cash, when taking over the home, but presumably a bank would be happy to step in and provide you a mortgate secured against the much more valuable home.

Maybe this is overly simplistic. What are the cases where the inheritance tax forces a family into an untenanble housing situation?

They do offer financing, then once you own the home, you can mortgage and clear the loan (at likely lower interest) then pay it off.

Also I think the cap is above £500k

I imagine if he house is £12m then no, but then you're now a millionaire.

 

[golden_blunder]

I’m just talking hypotheticals here chaps but I am sure that there will be cases where people cannot afford to remortgage a house.

Now I’m on the subject I need to broach it with my wife, her parents are elderly, she’s the only remaining living child so will inherit the house when they pass. She wants to keep it for our kids but no chance we can afford a remortgage or a loan to pay IT, so need to get ahead of this

 

[africanspur]

Couldn't you just refinance in most cases? If your parents leave you a £600,000 home, and you have to pay inheritance tax of the share above £325,000, then the tax comes out to £110,000. You are still £490,000 better off than you were before. You might have to pay the tax in cash, when taking over the home, but presumably a bank would be happy to step in and provide you a mortgate secured against the much more valuable home.

Maybe this is overly simplistic. What are the cases where the inheritance tax forces a family into an untenanble housing situation?

Incidentally, you actually wouldn't be paying it on the above if we're talking about parents plural. From what I understand, its £325,000 per parent (so £650k total) and if we're including primary residence, there's an extra £175k per parent. So £1 million of nice extra wealth for the kids before they even have to think about paying inheritance tax.

Close the loopholes surrounding it, rather than get rid of it completely. And I say this as someone who's kids will be paying it and completely rightly so.

 

[Stanley Road]

The first £325,000 is tax free in the UK. How does that target much poorer people?

it's a number thought up by the uber wealthy politicians deemed to be too much for a pleb to have, it's that simple. Yet in their world 325k is feck all and they wont be paying any.

Bottom line is we all need to get smarter and think about the future, once you reach 55 hand over POA to your kids in the event that they can take over when you cant make rational decisions. Then while still of sound mind eplain to them how to bypass IHT tax by moving their money while they are still alive but sick, this way it will appear that the person died with feck all and the profit from house wil go to some untouchable trust fund set up by the kids.

 

[Stanley Road]

https://www.theguardian.com/news/20...ealth-im-creating-the-tax-i-would-want-to-pay

 

[Stanley Road]

Sorry if the family home is £750k without mortgage/debt and you inherit it, you have a £100k IHT bill, which can be paid over ten years, with interest back to HMRC or you can just get bridging finance to cover/remortgage the property.

I'm in the final stage of probate right now and this isnt right

Assets are gathered at the time of death and the amount is declared at the Tax Office, what you are obliged to pay is expected in months by the tax office. How do i know? Cos i have to pay it and dont have it

 

[acnumber9]

I'm in the final stage of probate right now and this isnt right

Assets are gathered at the time of death and the amount is declared at the Tax Office, what you are obliged to pay is expected in months by the tax office. How do i know? Cos i have to pay it and dont have it

It depends on what you’ve inherited but there are plenty of examples of things you can pay over ten yearly instalments.

 

[Stanley Road]

It depends on what you’ve inherited but there are plenty of examples of things you can pay over ten yearly instalments.

Maybe but it's pointless and that offer never came and they have had nowt for more than a year.

Nicest part is my brothers work pension which the govt can't touch

 

[clarkydaz]

i was under the impression you had to pay IHT in around 6 months

 

[oneniltothearsenal]

The income that bought the asset has already been taxed so quite clearly double taxation. Saying it isn't double taxation because the dead person isn't paying the second lot of tax is meaningless exceot as a way for givernment to tax those not at the top end of town. Tory politicians will love it as they can afford to avoid it. VAT/GST is double taxation but neccesary as it is hard to avoid. Inheritance tax raises feck all revenue and fails to target the truly wealthy so further impedes economic mobility. So is is inequitable, pointless and double taxation, especially when applied to the family home.

It's not double taxation because taxation is based on the person receiving income not on the money itself. An inheritance is new income for the person receiving the inheritance. By this logic, any income tax is "double taxation" because that money was already taxed by the company that pays the salary. Or on a personal level, let's say I pay $1000 out of the money I made (and was taxed on) to someone performing work on my house. That money was already taxed but when I pay the contractor working on my house, its new income for them. They don't get to not pay taxes on it because I already paid taxes on that money when I received it as income.

 

[acnumber9]

Maybe but it's pointless and that offer never came and they have had nowt for more than a year.

Nicest part is my brothers work pension which the govt can't touch

It’s far from pointless if you want to keep the asset. They’re not going to offer it. It’s your job or the solicitors to ask for that option.

 

[Buster15]

I'm not sure why not being fortunate enough to hit IHT thresholds means that a person's opinion on the tax should be ignored, nor how you (or even the posters in many cases) know whether they are likely to be subject to the tax or not to decide whether to disregard their opinion or not. I don't really understand, but fair enough.

I do understand the point you are making.
All I was trying to say, but probably didn't say it clearly enough, was that it is very easy to say blah blah about how much tax other people should pay as long as that doesn't affect themselves.

They can say that if they choose. But I won't take much notice.

 

[Wibble]

It's not double taxation because taxation is based on the person receiving income not on the money itself. An inheritance is new income for the person receiving the inheritance. By this logic, any income tax is "double taxation" because that money was already taxed by the company that pays the salary. Or on a personal level, let's say I pay $1000 out of the money I made (and was taxed on) to someone performing work on my house. That money was already taxed but when I pay the contractor working on my house, its new income for them. They don't get to not pay taxes on it because I already paid taxes on that money when I received it as income.

That is just semantics. And all it would do (if we had it) is make me spend a bit of money to protect my assets e.g. make the family home owned by a family trust. Much easier to exempt the family home and apply capital gains tax to the other assets in exactly the dame way as if you hadn't died and sold the asset.

 

[Posh Red]

Woot. What is that? Half a 2 bed flat in London?

My objection is that it is double taxing. I paid tax on what was then used to accumulate a little something to pass on. To then have it taxed again putting my son on the same no-win path is terribly unethical. Doubly so if the family property had to be sold to pay the tax.

If the threshold was higher or maybe if there was a total exemption if a primary residence was passed down and used for non-investment purposes for (say) 5 years, then I'd have less issue with it.

I would do some research on how inheritance tax is actually applied in the UK, the relevant thresholds, reliefs, exemptions etc. I’m a financial adviser, and can tell you that a) the vast majority of people are not impacted whatsoever, and b) those that may be affected can avoid it quite easily with the correct financial planning.

 

[Posh Red]

Couldn't you just refinance in most cases? If your parents leave you a £600,000 home, and you have to pay inheritance tax of the share above £325,000, then the tax comes out to £110,000. You are still £490,000 better off than you were before. You might have to pay the tax in cash, when taking over the home, but presumably a bank would be happy to step in and provide you a mortgate secured against the much more valuable home.

Maybe this is overly simplistic. What are the cases where the inheritance tax forces a family into an untenanble housing situation?

It’s been mentioned so many times in this thread already, but the threshold is effectively increased to £500,000 if you’re passing your main residence down to direct descendants, and therefor £1,000,000 for a married couple.

 

[The Purley King]

I would do some research on how inheritance tax is actually applied in the UK, the relevant thresholds, reliefs, exemptions etc. I’m a financial adviser, and can tell you that a) the vast majority of people are not impacted whatsoever, and b) those that may be affected can avoid it quite easily with the correct financial planning.

Exactly.
Unless the sole remaining parent dies unexpectedly then it’s really not that hard to avoid.
I don’t see what the big deal is personally and this comes from someone who will likely encounter it unless one or both of my parents require in house care for several years in their old(er) age.

 

[oneniltothearsenal]

That is just semantics. And all it would do (if we had it) is make me spend a bit of money to protect my assets e.g. make the family home owned by a family trust. Much easier to exempt the family home and apply capital gains tax to the other assets in exactly the dame way as if you hadn't died and sold the asset.

I don't think its just semantics. Its the only rational (IMO) way to look at taxation because if you start looking at tax as something that is tied to the actually #s of money itself, it leads to some wonky conclusions like the example I mentioned above where someone doing work on my house shouldn't get taxed because the money I paid them with "was already taxed". I find it to be an irrational and a pragmatically impossible way to look at taxes. Taxes happen with new income to a new person. That's the only fair and only practical way for taxes to work.

How to structure things like an inheritance tax to make it fair for the average middle class person is a different issue but claiming its "double taxation" really doesn't make any sense nor is that a workable way to view taxation in general.

 

[Wibble]

I would do some research on how inheritance tax is actually applied in the UK, the relevant thresholds, reliefs, exemptions etc. I’m a financial adviser, and can tell you that a) the vast majority of people are not impacted whatsoever, and b) those that may be affected can avoid it quite easily with the correct financial planning.

I know how it works but the level it comes in is ludicrously low given the cost of real estate, particularly in the SE. And people could avoid it, but the very people who wouldn't know how to (or even that they need to) are those victimised by such an unfair tax. Exclude the family owner occupied home, as they do here, and the problem is solved.