[Politics] Inheritance Tax

[Herr Tubthumper]

This cabal really know how to motivate folks to do well and save a few quid.

Quite. As I posted in another thread I prefer them to tax me after my death than whilst I'm living. I wont be needing any money where i'm going #FullyMotivated

 

[Weststander]

I understand that, currently, the Executor has the responsibility to identify any gifts within the last seven years. That's why it's important for all gifts to be documented, with details left with the Will.

People make huge gifts in the decades prior to the 7 years. I see it. All legit.

 

[Weststander]

There was an article in Private Eye a few issues ago about the huge amounts of IHT avoided by rich people buying agricultural land as that is exempt from IHT, which has led to significant increases in land values.

It would seem more equitable to target active tax avoidance schemes like that before people (yes, me included if my mum's care home fees don't use it up first) whose parents bought their house decades ago.

The pro IHT/much higher taxes accountant on 5live at 9:15 this morning was talking about that, he wants that exemption removed.

But he was being too generalistic.

A new relief should exempt genuine working farmers passing farms down. They don't generally have cash, often the farming has passed down the generations.

Whilst catching the tax avoiders without a jot of interest in the industry.

 

[Wes Tupper]

People make huge gifts in the decades prior to the 7 years. I see it. All legit.

Indeed, but potentially passing CGT and second home issues onto the recipients.

 

[Weststander]

Indeed, but potentially passing CGT and second home issues onto the recipients.

Not with cash. No government has ever raised CGT on cash or proposed it.

 

[pocketseagull]

This cabal really know how to motivate folks to do well and save a few quid.

If your motivation to be part of the 4% who leave taxable estates is purely altruistic then why would you save less if IHT goes up

 

[nicko31]

There was an article in Private Eye a few issues ago about the huge amounts of IHT avoided by rich people buying agricultural land as that is exempt from IHT, which has led to significant increases in land values.

It would seem more equitable to target active tax avoidance schemes like that before people (yes, me included if my mum's care home fees don't use it up first) whose parents bought their house decades ago.

Yeap land is a big loophole and open to abuse. But protect genuine farmers.

Exemption after 25 years or so..

 

[Wes Tupper]

Not with cash. No government has ever raised CGT on cash or proposed it.

But tax will be charged on the interest. And you probably wouldn’t want to hold large sums in cash.

 

[nicko31]

This cabal really know how to motivate folks to do well and save a few quid.

Most people won't be effected, most people don't have >£1kk of assets.

But the DM will tell everyone will be screwed. Use to money to do some proper levelling up

 

[Weststander]

But tax will be charged on the interest. And you probably wouldn’t want to hold large sums in cash.

Do you work in finances and see the wealth of individuals? I do.

People do hold vast amounts of cash from various means or wrappers. 50 or 60 year old person gifts £100,000's or £m's to their offspring or grandkids, typically lives another 25 years, no IHT is paid.

Tax on interest is an irrelevance in this discussion. Labour/left wing think tanks are calling for a later tax, IHT, irrespective of taxes already paid in a lifetime.

 

[Wes Tupper]

Do you work in finances and see the wealth of individuals? I do.

People do hold vast amounts of cash from various means or wrappers. 50 or 60 year old person gifts £100,000's or £m's to their offspring or grandkids, typically lives another 25 years, no IHT is paid.

Tax on interest is an irrelevance in this discussion. Labour/left wing think tanks are calling for a later tax, IHT, irrespective of taxes already paid in a lifetime.

We could go at it all day. I obviously agree with you that lifetime gifts can avoid IHT and am simply pointing out that some of the prospective IHT loss will be recovered by the Exchequer in other forms. No more than that.

 

[beorhthelm]

Most people won't be effected, most people don't have >£1kk of assets.

But the DM will tell everyone will be screwed. Use to money to do some proper levelling up

if you're counting all people might be the case, if you're counting pensioners then their assets are considerably higher. average pension pot is ~250k before adding other savings and property.

the reason only 4% pay it is because of the copious reliefs, exemptions and loopholes, all for good reasons so difficult to withdraw. anyone with a large estate plans for IHT, partly to make life easier for others: the system encourages avoidance. the tax falls largely upon those that didn't plan.

 

[Professor Plum]

Most people won't be effected, most people don't have >£1kk of assets.

But the DM will tell everyone will be screwed. Use to money to do some proper levelling up

The figures quoted for the relatively small numbers of people hit by IHT are misleading. This number doesn’t represent the number of 'rich people', it represents the number of people who don’t get their act together in time to deal with IHT, or who die unexpectedly early. A much larger number are potentially eligible but take steps prior to death to avoid paying it.

What I can’t give away in the 7 years prior to death will be left to charities. At least I know broadly where the money is going. The idea that IHT is a hypothecated tax, channelled into 'levelling up' schemes is extremely naive. No, the relatively small sums raised by IHT will be sucked into a minor cell in the Exchequer’s spreadsheet and will vanish into overall spending / debt management.

 

[Weststander]

We could go at it all day. I obviously agree with you that lifetime gifts can avoid IHT and am simply pointing out that some of the prospective IHT loss will be recovered by the Exchequer in other forms. No more than that.

Not looking for a row. To expand on a common example, people might have £800k in cash or shares ISA's. They cash in and pass on, with a life expectancy of another 20 years.

Swerving all taxes including IHT.

People really do make these moves, hellbent on never paying IHT.

The personal wealth of possibly millions in southern England is off the scale. I know someone through nsc who had access to a database, funds held by 10,000's folk at this one place were off the scale.

 

[dazzer6666]

I understand that, currently, the Executor has the responsibility to identify any gifts within the last seven years. That's why it's important for all gifts to be documented, with details left with the Will.

Yes, but virtually impossible to control/check, whereas nailing the final estate is really simple as you can’t get probate until IHT has been confirmed and settled

 

[dazzer6666]

if you're counting all people might be the case, if you're counting pensioners then their assets are considerably higher. average pension pot is ~250k before adding other savings and property.

the reason only 4% pay it is because of the copious reliefs, exemptions and loopholes, all for good reasons so difficult to withdraw. anyone with a large estate plans for IHT, partly to make life easier for others: the system encourages avoidance. the tax falls largely upon those that didn't plan.

Pension pots aren’t (currently) included in your estate for IHT purposes. Maybe that’s the next change

If the rules change significantly, the economy will get a huge boost as ‘spending it’ will become the only way to avoid the tax. I can cope with that

 

[Herr Tubthumper]

If your motivation to be part of the 4% who leave taxable estates is purely altruistic then why would you save less if IHT goes up

Because @Is it PotG? has not properly thought through, or probably even read anything about, today's glib post?

 

[drew]

if you're counting all people might be the case, if you're counting pensioners then their assets are considerably higher. average pension pot is ~250k before adding other savings and property.

the reason only 4% pay it is because of the copious reliefs, exemptions and loopholes, all for good reasons so difficult to withdraw. anyone with a large estate plans for IHT, partly to make life easier for others: the system encourages avoidance. the tax falls largely upon those that didn't plan.

Simple then. Get rid of the avoidance/exemptions but then also lower the rate of tax.

 

[METALMICKY]

The figures quoted for the relatively small numbers of people hit by IHT are misleading. This number doesn’t represent the number of 'rich people', it represents the number of people who don’t get their act together in time to deal with IHT, or who die unexpectedly early. A much larger number are potentially eligible but take steps prior to death to avoid paying it.

What I can’t give away in the 7 years prior to death will be left to charities. At least I know broadly where the money is going. The idea that IHT is a hypothecated tax, channelled into 'levelling up' schemes is extremely naive. No, the relatively small sums raised by IHT will be sucked into a minor cell in the Exchequer’s spreadsheet and will vanish into overall spending / debt management.

And all the best planning in the world can also be royally fecked up if someone in double quick time gets severe dementia!

My big issue is the simplistic perception of the average Joe that IHT is a fabulous idea that only hits the super rich tax dodgers. The reality is that it can equally hit very normal working class folk who perhaps might have built up a successful business or made good investment decisions.

 

[hampshirebrightonboy]

if you're counting all people might be the case, if you're counting pensioners then their assets are considerably higher. average pension pot is ~250k before adding other savings and property.

the reason only 4% pay it is because of the copious reliefs, exemptions and loopholes, all for good reasons so difficult to withdraw. anyone with a large estate plans for IHT, partly to make life easier for others: the system encourages avoidance. the tax falls largely upon those that didn't plan.

I'm not sure I believe this 4% figure that keeps on getting mentioned. Whatever the true percentage it is only going to increase.