[Politics] Inheritance Tax

[fly high]

Now, can you envisage any government agreeing that in turn for many millions of £’s IHT coming in that they will only ever use it for housing for the needy?.. dont hold your breath.

The only reason they want to grab more IHT is to pay for their pet projects which may (or probably won't) include housing. My view is it suits their 'envy' philosophy.

 

[BLOCK F]

I do think that there’s been quite an improvement of late, not perfect no, but much better that many of earlier one where every box looked the same and were rammed into tightly you could hear the bloke 10 houses down snoring.

Yes, I think it is quite noticeable.

 

[beorhthelm]

Most increase in house values, which I would say makes up much of the estates of those concerned, hasn't yet been taxed. It's not earnings as such, it's capital gains. So, if IHT was done away with, would we all end up paying CGT on the increase in value of the property instead?

that would be more consistant approach.

 

[A mex eyecan]

The only reason they want to grab more IHT is to pay for their pet projects which may (or probably won't) include housing. My view is it suits their 'envy' philosophy.

that I’m not disputing, I’m just saying they would get far more people happier to pay IHT if it went sole for housing. Even if that’s not their intentions just think of a better society if it were used that way.
Just being a dreamer …

 

[chip]

I do think that there’s been quite an improvement of late, not perfect no, but much better that many of earlier one where every box looked the same and were rammed into tightly you could hear the bloke 10 houses down snoring.

Agree, been a couple of good ones near me. I just really dislike the placing of the affordable homes in one corner or at the entrance, especially when they are in a different style or construction method.

 

[BLOCK F]

Agree, been a couple of good ones near me. I just really dislike the placing of the affordable homes in one corner or at the entrance, especially when they are in a different style or construction method.

Well, I suppose if they are of cheaper design, with out being awful, then more can be built, maybe.

 

[Machiavelli]

Precisely.

If I said I'd give you £100K, which you had never earned, but on condition you immediately gave me £40K back, who is going to say no?

60% of something is better than 100% of nothing!

You're spot on, of course, but that's not the way the majority view things. Numerous studies have demonstrated that most are more resentful about having to give away a small amount, even if it means getting a larger amount. This is playing out on this thread on IHT and it's why so many are hostile to IHT even though their estates won't be liable to it.
When I pop off, I won't be remotely concerned if I do have to pay IHT because it's due to general social, historical and technological developments -- rather than because 'I've worked hard for it'.

 

[Machiavelli]

I think I know where you’re coming from. I just hope none of my beneficiaries cuss when they see me spending money.

I'm cussing because everyone on here knows that I'm a beneficiary

 

[Wes Tupper]

Most increase in house values, which I would say makes up much of the estates of those concerned, hasn't yet been taxed. It's not earnings as such, it's capital gains. So, if IHT was done away with, would we all end up paying CGT on the increase in value of the property instead?

CGT is currently not payable on the sale of your main residence. Introducing it on main residences would guarantee losing the next election.

 

[Bodian]

CGT is currently not payable on the sale of your main residence. Introducing it on main residences would guarantee losing the next election.

Yes. And that's the thing isn't it. They are not wrong in saying that there are some 'difficult decisions'. Whichever tax they increase (and tax is going to have to increase) will upset someone.

 

[Weststander]

CGT is currently not payable on the sale of your main residence. Introducing it on main residences would guarantee losing the next election.

The mechanics of IHT work fine as it is. Solicitors one way or another have control of the assets, from what’ve seen HMRC are red hot in collecting the actual tax due (to the anger of beneficiaries), the tax collection take must be near 100%.

By contrast CGT would give opportunities for spending all the money or making it disappear, or entice the criminally minded not to register to file a tax return.

 

[Wes Tupper]

Yes. And that's the thing isn't it. They are not wrong in saying that there are some 'difficult decisions'. Whichever tax they increase (and tax is going to have to increase) will upset someone.

Tax revenues will always increase, with or without a budget, but yes, there are strong rumours about changes to CGT and IHT.
I’d also add that before every budget there are rumours about pension lump sums being taxed. Historically this has never been introduced and we are expected to breathe a sigh of relief each time that the budget wasn’t as bad as it could have been.

 

[beorhthelm]

CGT is currently not payable on the sale of your main residence. Introducing it on main residences would guarantee losing the next election.

when you're dead, the concept of main residence kinda goes too.

 

[drew]

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.

Then keep the exemptions provided they are bona fide.

 

[A mex eyecan]

when you're dead, the concept of main residence kinda goes too.

well yes, although if buried the size of main residence reduces to about 6’x2’

 

[zefarelly]

I think I know where you’re coming from. I just hope none of my beneficiaries cuss when they see me spending money.

My step dad said. . . . 'I'm leaving you boys the house, but I'm spending all the f***ing money' alongside . . . I don't want a funeral, get me cremated and go down the pub.

We laughed . . . Then when he died, cried, then laughed again . . .we always thought he'd leave it to a bizarre Morrocan squirrel sanctuary or something . . .

 

[dazzer6666]

The mechanics of IHT work fine as it is. Solicitors one way or another have control of the assets, from what’ve seen HMRC are red hot in collecting the actual tax due (to the anger of beneficiaries), the tax collection take must be near 100%.

By contrast CGT would give opportunities for spending all the money or making it disappear, or entice the criminally minded not to register to file a tax return.

Agree. Changes to IHT rules that kick in on death and the value of the final estate can be easily implemented and the tax easily collected. Trying to strangle the rules on lifetime gifts etc is almost impossible.

 

[Shropshire Seagull]

A supercomputer monitoring the worldwide assets of 68m folk throughout their lives is a non starter.

Allow me to introduce the HMRC Data Capture Data Match system.

All the countries who have a reciprocal tax treaty (the list is quite extensive) share information. Yes there are a couple of tax havens still out there but generally speaking, most countries are now very financially joined-up.

I'm not permitted to explain any detail of DCDM, but as a summary, it generates a global financial portfolio footprint of every UK tax domicile, the IT side of this system has been in place many years. The problem is, there is no way HMRC could resource investigation of every individual who may have underpaid (accidently or intentionally) some of their tax liability.

What it does do is calculate a "potential yield" of tax to decide a risk-score and only the cases that generate the highest risk score will/may be investigated.

"Throughout their lives" is interesting. HMRC use the seven-year rule for income/tax investigation. But retention for ALL pension data is the life of the pensioner + 10 years. I don't know about all assets but all names on property deeds are fed into DCDM. So if you gift (or sell for a £1) the new property owner will be known to DCDM.

It's quite a big-brother, the only area it struggled with is money-laundering where zero assets or financial records leave no trail - but there are other systems that exist to (try to) address this - nuff said.

 

[Shropshire Seagull]

Everyone aged 16 or over has an NI number.

Correct, NI is not collected from earners under 16.
However, children under 16 (e.g. child actors) can earn income that is above the standard PAYE threshold and are therefore required to pay income tax.

Whilst most folk believe the NI number is their unique tax identification (with HMRC), this would be incorrect.
HMRC use "UTR" (Unique Taxpayer Reference) for more reliable identification.
Indeed, there were/are some (few) cases where more than one person was found to share the same NI number - this was a few years back now and the issue may well be resolved, but duplicate NIs were in circulation in 2010.

This subject gets very interesting with new/duplicate identities - like witness protection, undercover operations, SO10, etc. - but outside the scope of what can be discussed on this forum

 

[dazzer6666]

I have worked all my life from 18 where I started in a supermarket full time. I am not a high earner and never will be but I have worked hard and am now mortgage free on a house in Portslade worth about £550,000. I go on holiday every other year max and drive a 12 year old car. I don't have a season ticket or go out lots although I do have a comfortable life. - i'm not moaning.

I could have had a nice car on PPE, spent all my money each month and not paid off the mortgage.

So when it comes to nursing homes, inheritance tax etc is it fair that my family will be penalised for my forward thinking and fugility?

I know someone who goes to every gig or festival going, he is always on holiday and has admitted spunking up thousands on coke and gambling. He's in rented and living a cracking life.

Am I the mug? he'll still get looked after when he's old and while has nothing to pass down to his kid he wont get taxed to hell either.

There should be an advantage to living 'correctly' whatever that means. There are people that don't pay the consequences for their actions/lifestyles.

also this stat is scary:

As of June to August 2024, 9.26 million people aged 16-64 in the UK were economically inactive, which is 21.8% of that age group. This is more than 700,000 higher than before the COVID-19 pandemic.

If they were contributing and not taking then we wouldn't be having this debate at all.

How many of the so-called 'economically inactive' are early-retired by choice and essentially SKIERS ?

Daft phrase imo - I don't work and am below retirement age but spending more now in the economy than I did when I was working........most of which has VAT (or more likely excise duty ) attached. Accept my income tax contribution has plummeted but then I'm living off savings that were mostly accumulated from post-tax income.