Inheritance Tax

[icowden]

Saw this on the Twitter (apologies for the daily mail link but it's about the only source that isn't paywalled):-
https://www.dailymail.co.uk/news/ar...Hunt-scrap-morally-wrong-inheritance-tax.html

My major problem with this is that I sort of agree with it, which makes me feel quite unwell (one should always avoid agreeing with Jacob Rees Mogg).
My issue with inheritance tax articles like these is that they grossly misrepresent how it works and fail to understand that it has a different impact on different areas of the country.

'Estates of surviving spouses and civil partners can pass on up to £1 million without an inheritance tax liability - significantly more than the average UK home of £285,000.'

This isn't really true. If you are the remaining parent and you leave your house to your children then you pay inheritance tax on anything over £500,000. If you live in Surrey or Greater London there is a good chance your house will be worth more than £500,000, and that all of the money used to buy it will have already been taxed at source.

Personally I'd rather have fairer income tax rates, better methods for the superwealthy to contribute, more windfall taxes and blocks on paying out shareholders rather than address issues etc than inheritance tax.

What does the rest of NACA think about inheritance taxes?

 

[BoldonLad]

Saw this on the Twitter (apologies for the daily mail link but it's about the only source that isn't paywalled):-
https://www.dailymail.co.uk/news/ar...Hunt-scrap-morally-wrong-inheritance-tax.html

My major problem with this is that I sort of agree with it, which makes me feel quite unwell (one should always avoid agreeing with Jacob Rees Mogg).
My issue with inheritance tax articles like these is that they grossly misrepresent how it works and fail to understand that it has a different impact on different areas of the country.


This isn't really true. If you are the remaining parent and you leave your house to your children then you pay inheritance tax on anything over £500,000. If you live in Surrey or Greater London there is a good chance your house will be worth more than £500,000, and that all of the money used to buy it will have already been taxed at source.

Personally I'd rather have fairer income tax rates, better methods for the superwealthy to contribute, more windfall taxes and blocks on paying out shareholders rather than address issues etc than inheritance tax.

What does the rest of NACA think about inheritance taxes?

I agree with your view.

However, another example of "we should pay more tax, provided, it is not 'me' actually paying it".

 

[Bromptonaut]

I'm far from persuaded by the 'it's already been taxed once' argument.

My sis and I inherited upon our the death of our Mother. OK, savings in so far as they were accrued from earnings/pensions were taxed. Most of it however was gain on houses (she downsized 10 years before she died) and on investments and was not taxed at all.

 

[Beebo]

Mr Rees-Mogg also called for the tax to be scrapped, saying: 'Death duties are an inefficient form of taxation that is unfair and economically damaging. 'Unfair because it is a double tax on already taxed assets. Economically damaging because it leads to the misallocation of capital, as investments are made to avoid a distortive tax rather than to maximise investment return.'



So people with money can’t make more money because they are too busy working out how to avoid IHT. That’s so unfair for poor old Moggy.

 

[BoldonLad]

Mr Rees-Mogg also called for the tax to be scrapped, saying: 'Death duties are an inefficient form of taxation that is unfair and economically damaging. 'Unfair because it is a double tax on already taxed assets. Economically damaging because it leads to the misallocation of capital, as investments are made to avoid a distortive tax rather than to maximise investment return.'



So people with money can’t make more money because they are too busy working out how to avoid IHT. That’s so unfair for poor old Moggy.

I doubt old Moggy will fall foul of Inheritance Tax, he will no doubt have advice and the means to avoid it, in a similar way to the Miliband's.

 

[icowden]

I doubt old Moggy will fall foul of Inheritance Tax, he will no doubt have advice and the means to avoid it, in a similar way to the Miliband's.

This is the thing. If you are wealthy enough, then none of the rules apply as you just put stuff in Trusts or offshore companies etc.
I think *that* is the area that the Government should be focusing on.

 

[Beebo]

I doubt old Moggy will fall foul of Inheritance Tax, he will no doubt have advice and the means to avoid it, in a similar way to the Miliband's.

But his point is that the capital would be better invested elsewhere rather than in a trust.

 

[theclaud]

and that all of the money used to buy it will have already been taxed at source.

This is nonsense on stilts. The tax is on the transaction. The hatred of inheritance tax amongst the wealthy is just bog standard class asset-hoarding and wagon-circling against economic justice.

 

[icowden]

I agree with your view.
However, another example of "we should pay more tax, provided, it is not 'me' actually paying it".

True. I was more thinking that if my wife and I were to shuffle off our mortal coils, our daughters would inherit the house that they currently live in. They would then have to immediately sell it as the inheritance tax would be at least £100k. It's not a mansion by any means, but we live in an affluent area where house prices are high, so the property value is therefore quite a bit over that £500k threshold.

 

[icowden]

This is nonsense on stilts. The tax is on the transaction.

Eh? All the money that has paid for my house has been earned and therefore taxed appropriately.
Admittedly I don't need it when I'm dead, but I'd prefer my kids not to have to the stress and trauma of selling their home, just because the Government want a share.

 

[winjim]

I think a regular family home shouldn't cost half a million pounds for starters. Or even quarter of a million if we're using the 'average'.

But the argument that the money has already been taxed is disingenuous. My income is taxed via PAYE but with it I pay all sorts of other taxes such as VAT, council tax, stamp duty, vehicle tax, duty on booze etc etc. Should we scrap all those taxes as well?

 

[Beebo]

True. I was more thinking that if my wife and I were to shuffle off our mortal coils, our daughters would inherit the house that they currently live in. They would then have to immediately sell it as the inheritance tax would be at least £100k. It's not a mansion by any means, but we live in an affluent area where house prices are high, so the property value is therefore quite a bit over that £500k threshold.

But your daughters can inherit up to £1million tax free if you and your wife transfer the house within the family.
It’s a shame to sell the family home but they can sell up and buy elsewhere if they have too.
Or they get a small mortgage to stay in the house.

I do agree that the super rich can just avoid it, and the wealthy middle class seem to take the largest hit.

 

[Electric_Andy]

I don't underdstand the logic behind inheritance tax; please feel free to enlighten me. If my Dad left me a million pound estate when he died, which he worked hard for, and chooses to leave it to me, why do I then owe money on it? In principle it's the previous owners' right, and choice, as to who they give money to surely?

Someone could also win £70m on the lottery and not pay a sausage, but inherit £1m and you have to hand (what %) over to the government?

 

[Electric_Andy]

ok so it was introuduced in 1796 to try and protect the poor and to stem the continued wealth of the rich, a bit.

You can now leave £325,000 tax free. Anything over this will be taxed at a rate of 40%, or 36% if you donate at least 10% to charity.

The only way around it I guess is to give away your wealth and then survive at least 7 years.

 

[icowden]

But your daughters can inherit up to £1million tax free if you and your wife transfer the house within the family.

So they say. I can't see that on the Gov website though. That soundly puts the limit at £500k.

It’s a shame to sell the family home but they can sell up and buy elsewhere if they have too.
Or they get a small mortgage to stay in the house.

How are they going to get that? At the moment they are 14 and 16 and in full time education. They would live with the in laws and have to sell the property.