[Politics] Inheritance Tax

[A mex eyecan]

I would imagine that many more ‘ordinary’ folk in the south are going to get sucked into IHT liabilities. Many own their own homes and many of those alone are worth 700k plus. So unless they end up in care homes which would eat that money up pretty damn quick then they are very likely to be paying IHT in the future.

 

[beorhthelm]

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

like those to allow farms and business to pass on? so the Giles family farm sold off, or Arkwight's Machinery has to fold to pay off the inheritance. the exemptions are there from decades of adjustment to make it "fair".
there's an IFS article on IHT that proposes various changes to about dozen exemption before getting into the meat of the article which highlights the complexity of IHT. best of to get rid altogether and tax the recipients.

 

[Professor Plum]

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

It’s incredibly misleading, as has been pointed out. 4% is the percentage of people who, for whatever reason, haven’t made plans to avoid paying it. But you’ll hear the Chancellor constantly quote this figure to pretend that IHT is a concern for only a tiny minority.

 

[Weststander]

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.

Should a couple worth at peak £2m, pay a very significant sum in IHT on the second death? That's the crux here possibly.

I'd say yes.

 

[Herr Tubthumper]

Should a couple worth at peak £2m, pay a very significant sum in IHT on the second death? That's the crux here possibly.

I'd say yes.

I second this.

 

[Wes Tupper]

I would imagine that many more ‘ordinary’ folk in the south are going to get sucked into IHT liabilities. Many own their own homes and many of those alone are worth 700k plus. So unless they end up in care homes which would eat that money up pretty damn quick then they are very likely to be paying IHT in the future.

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

 

[A mex eyecan]

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

So someone then saying their 40/50’s buying a home that’s cost £750k on a mortgage that they manage to clear by the time they retire at 66 or whatever from earned and taxed money should then be ‘heavily’ taxed because they’ve done that?

 

[Weststander]

So someone then saying their 40/50’s buying a home that’s cost £750k on a mortgage that they manage to clear by the time they retire at 66 or whatever from earned and taxed money should then be ‘heavily’ taxed because they’ve done that?

£650k to £1m currently exempt from IHT.

 

[A mex eyecan]

£650k to £1m currently exempt from IHT.

yes, well as of today. The 1m only comes into play if they leave to children/grandchildren (I think).
But the point I was trying to make, perhaps clumsily, is that there may well be many more people getting sucked into IHT in the south than may have been previously if they are home owners. If they’re buying know at 750k in 15 odd years it will be worth more than that so hence nearer the IHT levels

 

[essbee1]

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

I don't think you've thought this through properly Wes.

 

[Wes Tupper]

I’d say that £1 million per couple, appropriately indexed, would be a reasonable threshold.

 

[Weststander]

yes, well as of today. The 1m only comes into play if they leave to children/grandchildren (I think).
But the point I was trying to make, perhaps clumsily, is that there may well be many more people getting sucked into IHT in the south than may have been previously if they are home owners. If they’re buying know at 750k in 15 odd years it will be worth more than that so hence nearer the IHT levels

You were clear, I understand, the original purchase price will partly fall under IHT too. So not a gain as such, a cost paid out of already taxed wages.

 

[A mex eyecan]

I’d say that £1 million per couple, approximately indexed, would be a reasonable threshold.

I’d agree with that. Seems a fair enough level.
EDIT. Maybe also suggest the percentage charged should increase at differing levels, i.e. 1st M 40%, next 500k 45%, next 50%. I’m sure though someone will soon tell me that my simple little thoughts would prove unworkable

 

[Machiavelli]

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

It'd be a pretty wise move and, given the growth agenda punted by the government, something to look out for. There might even be a way of encouraging a person/couple (or 'estate' if you will) to pass on some of their assets to their chosen recipient/s prior to the stage in life where the 7 year rule kicks in AND raising some revenue in the process -- working out how to do that is too much for my poor little head though.

 

[Machiavelli]

I second this.

Thirded.

 

[Professor Plum]

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

It’s easy to tell other people what to do with their lives and their money, isn’t it?

 

[Herr Tubthumper]

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

Mixed feelings on down sizing. But I agree that unearned money should be taxed. IHT seems to have rattled the right-wing cage; I would have thought Tories would be on board with taxing people who receive hand outs?

 

[Herr Tubthumper]

It’s easy to tell other people what to do with their lives and their money, isn’t it?

Easier when they're dead though.

 

[Professor Plum]

Mixed feelings on down sizing. But I agree that unearned money should be taxed. IHT seems to have rattled the right-wing cage; I would have thought Tories would be on board with taxing people who receive hand outs?

You can be such a tedious troll.

 

[Wardy's twin]

Always find it strange that the government seems not to think that good financial planning for 'old age' - house, good pension pot i.e. not being a burden is seen as a soft target

Much better that they should downsize, and share or spend the cash, rather than rattle around in a family house. Quite right that unearned fortunes should be heavily taxed.

Not sure its as unearned as people say , for many its more of a life style choice i.e. pay a bigger mortgage and forgo on new cars, holidays etc. even more strange when such planning probably means people are less likely to be a burden on the state e.g. pay private medical and will pay for their own social care.