Progressively on what? The amount they receive (which is basically what's done now) or the amount they have or what?
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[Politics] Inheritance Tax
- Thread starter nicko31
- Start date
Weststander
Well-known member
Over the years, including on NSC, tax avoidance (legal) has been very deliberately conflated with tax evasion. Anger that wealthy folk use trusts to avoid IHT. Low and behold, NSC’ers from ‘the left’ and right use trusts too. Not dissimilar to frequent past discussions here that tax evasion by small businesses is fine, catch the multinationals instead.
Double standards. Everyone should pay their fair whack.
Effectively, recipients are taxed as the pot from which their inheritance is paid is, if it meets the thresholds, reduced by IHT.
Would agree with other comments that if any changes are to be made then it should include an overhaul of IHT avoidance schemes.
As for those attempting to make a 'political' point by describing it as levelling down (as opposed to up), exactly how would you level up. The point is that money is redistributed from the top towards the bottom, there is no other way unless you think the poorer elements of society should be contributing more to the lifestyles of the rich!
Would agree with other comments that if any changes are to be made then it should include an overhaul of IHT avoidance schemes.
As for those attempting to make a 'political' point by describing it as levelling down (as opposed to up), exactly how would you level up. The point is that money is redistributed from the top towards the bottom, there is no other way unless you think the poorer elements of society should be contributing more to the lifestyles of the rich!
Weststander
Well-known member
The question is, where will the money be spent?
To literally meet the definition of levelling up, it needs to help the have-nots get a foot up or more in society. For example Sure Start, social housing, support for carers and the disabled, mental health services.
I agree. Although my biggest bugbear is allowing the likes of Amazon and Google to operate here and pay next to no tax. I would like to overhaul the system such that they pay tax on revenue generated here, which they can't hide as easily as profits.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,034
count as income, or capital gains at 0 cost base. uses existing process so minimal change to tax, keeps it simple.
- Jul 10, 2003
- 27,795
I have to say, maybe I've missed it, but I haven't seen anyone on NSC whether left or right, posting about trusts to avoid tax
We have a trust set up whereby if Me or Mrs Wz go first, the house goes into trust (trustees being remaining parent and kids) but that is so that the surviving one of us can only use their half of the house for medical/care expenses and the other half still goes to the kids or in the case of remarriage, protects their inheritance. This is, I understand fairly common, and has absolutely nothing to do with tax whatsoever.. The kids are fully aware that they will have to pay any IHT due.
You mentioned earlier about NSCers boasting about doing it. Maybe you could highlight the posts where NSC'ers have said they are doing this ?
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beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,034
one of the great ballaches and injustices of IHT is you cant complete probate until you paid the tax. months of fun with frozen accounts, locked up assets while you sort it all out then borrow money to pay off the sum. get rid of IHT and probate becomes a much simpler admin task.
Couldn't agree more.
- May 8, 2018
- 10,667
The majority of corporate structures I deal with at work end up with an irrevocable family trust within the beneficial owners.
We are obliged to understand the beneficial owners of the trust, its settlor, protector and trustees and the purpose, which is always family tax planning and is perfectly legal. The ownership often drives to the Caribbean and Channel Islands.
I myself was recommended to put our life insurance policy into a trust so it sits outside probate and importantly pays out quicker, all above board and makes sense
You might as well just tax the estate, it's easier to police.
Existing processes? How would you pay the beneficiaries through their employers PAYE system ? Or would you set up a separate system that has tax codes in it ? How would you make and track the payments?
Weststander
Well-known member
Keep it as it is. The tax yield must be pretty much 100%, relying on solicitors.
beorhthelm
A. Virgo, Football Genius
- Jul 21, 2003
- 36,034
you've not heard of Self Assessment? as annoying as it is to have to use for small amounts, it's a pretty simple system. declare the £5k from Aunt Maude, pay the 20% tax, sorted.
and thats the other point, the recipient pays so the allowances disappear, overall take is far larger. make some exception for couples, one named beneficary for property, otherwise all goes through the existing tax system.
dsr-burnley
Well-known member
- Aug 15, 2014
- 2,637
If I leave my (fictional) £10m to an overseas trust, then the money can't be taxed until a UK beneficiary receives the cash. IHT is collected all at once, not at the convenience of the recipients.
Weststander
Well-known member
Only 20% of UK adults are registered for Self Assessment.
How to collect the new tax from a disparate bunch of recipients, will they all declare it, will many just spend it all?
Umm, yes, I did it for 20 years
The vast majority of people aren’t on self assessment. You think all those recipients of Aunt Maude’s cash would declare their inheritances ? To prevent that, you’d need a reporting process at point of distribution and then an audit process to ensure all the distributions had been captured - and HMRC are already drowning. It would be a colossal admin overhead.
That‘s all we’ve done (and my parents did), as you say nothing to do with IHT or any other tax. From what I know IHT is actually pretty difficult to avoid for most - choices are spend it, give it away or take out an insurance policy to cover it.I have to say, maybe I've missed it, but I haven't seen anyone on NSC whether left or right, posting about trusts to avoid tax
We have a trust set up whereby if Me or Mrs Wz go first, the house goes into trust (trustees being remaining parent and kids) but that is so that the surviving one of us can only use their half of the house for medical/care expenses and the other half still goes to the kids or in the case of remarriage, protects their inheritance. This is, I understand fairly common, and has absolutely nothing to do with tax whatsoever.. The kids are fully aware that they will have to pay any IHT due.
You mentioned earlier about NSCers boasting about doing it. Maybe you could highlight the posts where NSC'ers have said they are doing this ?
Mancgull
Well-known member
My view is that Defined Contribution pensions should be brought into the scope of IHT. At present wealthy individuals are deferring drawing on their pension funds to leave their pension assets outside of their estate to mitigate IHT.
They got tax relief on contributions to build up these funds and the primary objective of a pension is to provide income in retirement.
If Rachel Reeves made this change these individuals would start taking their pension income from these funds and thereby start paying income tax on their pension income. Any residual funds would be within the scope of IHT.
Job done. Would raise a lot of tax I’d think.
They got tax relief on contributions to build up these funds and the primary objective of a pension is to provide income in retirement.
If Rachel Reeves made this change these individuals would start taking their pension income from these funds and thereby start paying income tax on their pension income. Any residual funds would be within the scope of IHT.
Job done. Would raise a lot of tax I’d think.