Inheritance Tax

[River Don]

A tax that affects just a relative few won't register as we head into a recession.

[BillyStubbsTears]

It's those with aspirations who DON'T want inheritance tax stopped who are like Turkeys voting for  Christmas!

https://www.drfc-vsc.co.uk/index.php?topic=289382.msg1271264#msg1271264

You started this thread by saying If you wanted proof that the Tories have given up on the next Election and are looking to line their own pockets.

How is considering abolishing a tax that is unpopular with 55% of the public a sign that they have given up on the next election?

Times have changed. The old working class has become a new middle class with aspirations, who like to choose what is best for them and their families. They want a political party that won't punish them for being successful. 

Inheritance tax is seen to be one of the most unfair taxes, according to a recent poll that shows 55% in favour of its abolishment,  with only 33% in favour of retaining it.

It's not going to win them the Election.

It's because they know that cutting IHT is a Very Bad Thing to do for the country as a whole. But a Very Good Thing for them and their mates.

They would only cut IHT when there's no comeback for them. Someone else will have to deal with the shit.

[Bentley Bullet]

I didn't say it was going to win them the election, I said it seemed it would be a popular decision with the public, and certainly not something that would be responsible for them losing the General Election.

[BillyStubbsTears]

If you want to reduce taxes and you have the money to do so, reduce regressive taxes. Ones where the poor pay a bigger percentage of their income much than the rich.

Cut VAT for example.

Don't cut taxes which are predominantly paid by the already very rich.

Unless your aim is to just make the rich richer.

[Bentley Bullet]

But you're changing the subject again. My point is that your OP is wrong and misleading.

[BillyStubbsTears]

I didn't say it was going to win them the election, I said it seemed it would be a popular decision with the public, and certainly not something that would be responsible for them losing the General Election.

With respect, you're confusing cause and effect in what I was saying in the OP.

I meant they are cutting IHT because they've given up on winning the election. Not they will lose the election because they are cutting IHT.

There are many instances when members of the electorate will support a policy in the mistaken belief that it will benefit them.

The electorate voted for Austerity in 2010, even though it was the most boneheadedly stupid economic policy in 80 years, and has contributed to us now earning about £10k per person per year less than we should be doing.

[Bentley Bullet]

Na BST. You were wrong, and now you're trying to wriggle out of it.

I doubt it will bother you too much. You know too well that people will still stand by you.

Night night.

[BillyStubbsTears]

It's not changing the goalposts at all by the way. If you really do have a little bit of spare money to cut taxes (plot spoiler: they don't, but they are going to do this anyway) then cutting IHT is one of the very worst things you can do in the interests of the country as a whole.

But.

It DOES make the already wealthy a lot better off.

There are two intimately connected questions:

1) Is it in the long term interests of the country and the economy to cut taxes now?

2) If the answer to the above is "yes", what taxes should be cut in the best long term interests of the country and the economy?

The answer to 1) is "At this moment, no". But they are going to do it anyway.

The answer to 2) is "Absolutely not IHT". But they are going to do it anyway.

Because it will make the rich richer. And someone else will have to clean up the mess.

[BillyStubbsTears]

Na BST. You were wrong, and now you're trying to wriggle out of it.

I doubt it will bother you too much. You know too well that people will still stand by you.

Night night.

Ahh, stupid me. I thought you were wanting to discuss the pros and cons of IHT like an adult. When all along, you just wanted another personal argument.

I never learn do I?

[Bentley Bullet]

On another day we'll address the rich leaving the country due to IHT.

[SydneyRover]

On another day we'll address the rich leaving the country due to IHT.

evidence?

[silent majority]

Jeez, there's some nonsense written on this thread, and people twisting figures to try and prove a point.

But I'm going to hold my hand up here and say that if my wife and I died tomorrow our kids would be faced with a rather large tax bill. My argument of course is that they shouldn't have to, and here's why.

Firstly BST with his opening post gets something wrong, he says it affects the 4% richest people in the country, when in actual fact that 4% applies to 4% of estates that fall into the IHT trap. Those very rich people that you talk about don't leave their estates to the vagaries of the tax man, no, they're rich enough to have moved all their assets and money around and out of the reaches of the tax man. That's one major reason why the current IHT rules don't work. IHT increasingly affects the normal working bloke because of the way the property market has moved in recent years.

And I would class myself as a normal working bloke. I grew up as one of 5 kids with a single parent. We lived in a council house and was as close to poverty as you can be. But I learnt lessons from my mum, and one of those was to work hard, and that's what I tried to do. I didn't have a fancy job either, just a bang average wage all my life, but what I did do was save. I did without the fancy car and holidays, instead I put money into my pension and on top of that I managed to build my own house by putting in the extra work, gave up evenings and weekends.

So, now I find myself with a reasonable pension pot and a house which puts me on the wrong side of the IHT trap. I've paid tax on all that money so that I could secure a future for me and my kids, and people on here suggest that losing 40% of that is OK? No, its not! Should I have squandered it along the way? Maybe. Does that put me on the right side of the argument that you guys seem to enjoy beating each other up about?

Its my money, and I should have the choice to do with it what I choose to do. If that's fancy cars and holidays then fair enough, why should me giving it to my children be any different?

[Bentley Bullet]

Well said that man.

[belton rover]

Jeez, there's some nonsense written on this thread, and people twisting figures to try and prove a point.

But I'm going to hold my hand up here and say that if my wife and I died tomorrow our kids would be faced with a rather large tax bill. My argument of course is that they shouldn't have to, and here's why.

Firstly BST with his opening post gets something wrong, he says it affects the 4% richest people in the country, when in actual fact that 4% applies to 4% of estates that fall into the IHT trap. Those very rich people that you talk about don't leave their estates to the vagaries of the tax man, no, they're rich enough to have moved all their assets and money around and out of the reaches of the tax man. That's one major reason why the current IHT rules don't work. IHT increasingly affects the normal working bloke because of the way the property market has moved in recent years.

And I would class myself as a normal working bloke. I grew up as one of 5 kids with a single parent. We lived in a council house and was as close to poverty as you can be. But I learnt lessons from my mum, and one of those was to work hard, and that's what I tried to do. I didn't have a fancy job either, just a bang average wage all my life, but what I did do was save. I did without the fancy car and holidays, instead I put money into my pension and on top of that I managed to build my own house by putting in the extra work, gave up evenings and weekends.

So, now I find myself with a reasonable pension pot and a house which puts me on the wrong side of the IHT trap. I've paid tax on all that money so that I could secure a future for me and my kids, and people on here suggest that losing 40% of that is OK? No, its not! Should I have squandered it along the way? Maybe. Does that put me on the right side of the argument that you guys seem to enjoy beating each other up about?

Its my money, and I should have the choice to do with it what I choose to do. If that's fancy cars and holidays then fair enough, why should me giving it to my children be any different?

Eloquently and simply put, Silent.
Your final paragraph should end the argument, but I doubt it will.

[BillyStubbsTears]

SM

You're right, it's 4% of estates. Do you have evidence that the richest exempt themselves from IHT?

The other figure I gave is still correct. Of all the estates below £1m, the average IHT take is 2%. For estates above £1m, the average IHT take is 17-20%.

So who benefits most from a cut in IHT.

Here's the point that you are not taking into account.

If you cut IHT, what else gives?

NHS funding?
Schools funding?
Defence funding?
Roads?
Rail?

Or do we put up VAT that disproportionately hits the poorer in society?

For what it's worth, under current rates and allowances, I would expect my own estate to be subject to a reasonably large IHT take. And that's fine. Because, yes, I've worked for my income. And I'd like my kids to enjoy some of that. And they will.

But I also acknowledge my responsibility to society. I grew up in a society that paid me to receive a degree education and a post-graduate qualification. That came out of the tax of other people. And I think I've got a responsibility to pay in so that bright kids from poor areas in future can get those opportunities.

It's about realising that your individual success isn't all about you.

[BillyStubbsTears]

Oh aye.

And if I were to die tomorrow, a decent chunk of my estate value would come from the fact that my house value has doubled since I bought it 11 years ago. I suspect that applies to many low end IHT cases.

I haven't earned that. But my benefit from that has come at the cost of many of the generation behind me being excluded from such wealth

Why should society not have the right to take a small percentage of that unearned wealth of mine and redistribute it?

[belton rover]

Mrs Belton and I agreed, very early on in our relationship, that we would not be ‘savers’ and that we would spend our hard earned income on bringing our children up in a way that allowed us, as a family, to experience life together. We have always, by choice, spent what we earned on family ‘stuff’.
My kids will get little in terms of financial inheritance from us because of the choices we made. They would not have changed a thing in terms of their childhoods, and their current relationship with us.
They have benefited from the money we have earned and spent throughout their lives (nothing extravagant, just with little thought for the future).
If we had taken a different approach and saved, saved saved to leave them a tidy inheritance, why on earth should the government take another cut of the money we had earned and payed taxes on?
In this case, it absolutely IS all about us.

[drfchound]

Jeez, there's some nonsense written on this thread, and people twisting figures to try and prove a point.

But I'm going to hold my hand up here and say that if my wife and I died tomorrow our kids would be faced with a rather large tax bill. My argument of course is that they shouldn't have to, and here's why.

Firstly BST with his opening post gets something wrong, he says it affects the 4% richest people in the country, when in actual fact that 4% applies to 4% of estates that fall into the IHT trap. Those very rich people that you talk about don't leave their estates to the vagaries of the tax man, no, they're rich enough to have moved all their assets and money around and out of the reaches of the tax man. That's one major reason why the current IHT rules don't work. IHT increasingly affects the normal working bloke because of the way the property market has moved in recent years.

And I would class myself as a normal working bloke. I grew up as one of 5 kids with a single parent. We lived in a council house and was as close to poverty as you can be. But I learnt lessons from my mum, and one of those was to work hard, and that's what I tried to do. I didn't have a fancy job either, just a bang average wage all my life, but what I did do was save. I did without the fancy car and holidays, instead I put money into my pension and on top of that I managed to build my own house by putting in the extra work, gave up evenings and weekends.

So, now I find myself with a reasonable pension pot and a house which puts me on the wrong side of the IHT trap. I've paid tax on all that money so that I could secure a future for me and my kids, and people on here suggest that losing 40% of that is OK? No, its not! Should I have squandered it along the way? Maybe. Does that put me on the right side of the argument that you guys seem to enjoy beating each other up about?

Its my money, and I should have the choice to do with it what I choose to do. If that's fancy cars and holidays then fair enough, why should me giving it to my children be any different?

Martin, that is a great summary of the way many of us feel about IHT.
We have paid our taxes along the way to where we are, some of us have taken risks with such as property and had they failed no one would have bailed us out would they.
I too would prefer anything I leave behind to go to my children and grandchildren without them having to pay a ridiculously high tax bill.

[Bristol Red Rover]

It's those with aspirations who DON'T want inheritance tax stopped who are like Turkeys voting for  Christmas!

Havng aspirations and inheritance tax are only connected by IT enabling more to achieve.

[Bristol Red Rover]

Jeez, there's some nonsense written on this thread, and people twisting figures to try and prove a point.

But I'm going to hold my hand up here and say that if my wife and I died tomorrow our kids would be faced with a rather large tax bill. My argument of course is that they shouldn't have to, and here's why.

Firstly BST with his opening post gets something wrong, he says it affects the 4% richest people in the country, when in actual fact that 4% applies to 4% of estates that fall into the IHT trap. Those very rich people that you talk about don't leave their estates to the vagaries of the tax man, no, they're rich enough to have moved all their assets and money around and out of the reaches of the tax man. That's one major reason why the current IHT rules don't work. IHT increasingly affects the normal working bloke because of the way the property market has moved in recent years.

And I would class myself as a normal working bloke. I grew up as one of 5 kids with a single parent. We lived in a council house and was as close to poverty as you can be. But I learnt lessons from my mum, and one of those was to work hard, and that's what I tried to do. I didn't have a fancy job either, just a bang average wage all my life, but what I did do was save. I did without the fancy car and holidays, instead I put money into my pension and on top of that I managed to build my own house by putting in the extra work, gave up evenings and weekends.

So, now I find myself with a reasonable pension pot and a house which puts me on the wrong side of the IHT trap. I've paid tax on all that money so that I could secure a future for me and my kids, and people on here suggest that losing 40% of that is OK? No, its not! Should I have squandered it along the way? Maybe. Does that put me on the right side of the argument that you guys seem to enjoy beating each other up about?

Its my money, and I should have the choice to do with it what I choose to do. If that's fancy cars and holidays then fair enough, why should me giving it to my children be any different?

Bottom line is that if they're having to pay tax then they're the lucky ones.

[silent majority]

Jeez, there's some nonsense written on this thread, and people twisting figures to try and prove a point.

But I'm going to hold my hand up here and say that if my wife and I died tomorrow our kids would be faced with a rather large tax bill. My argument of course is that they shouldn't have to, and here's why.

Firstly BST with his opening post gets something wrong, he says it affects the 4% richest people in the country, when in actual fact that 4% applies to 4% of estates that fall into the IHT trap. Those very rich people that you talk about don't leave their estates to the vagaries of the tax man, no, they're rich enough to have moved all their assets and money around and out of the reaches of the tax man. That's one major reason why the current IHT rules don't work. IHT increasingly affects the normal working bloke because of the way the property market has moved in recent years.

And I would class myself as a normal working bloke. I grew up as one of 5 kids with a single parent. We lived in a council house and was as close to poverty as you can be. But I learnt lessons from my mum, and one of those was to work hard, and that's what I tried to do. I didn't have a fancy job either, just a bang average wage all my life, but what I did do was save. I did without the fancy car and holidays, instead I put money into my pension and on top of that I managed to build my own house by putting in the extra work, gave up evenings and weekends.

So, now I find myself with a reasonable pension pot and a house which puts me on the wrong side of the IHT trap. I've paid tax on all that money so that I could secure a future for me and my kids, and people on here suggest that losing 40% of that is OK? No, its not! Should I have squandered it along the way? Maybe. Does that put me on the right side of the argument that you guys seem to enjoy beating each other up about?

Its my money, and I should have the choice to do with it what I choose to do. If that's fancy cars and holidays then fair enough, why should me giving it to my children be any different?

Bottom line is that if they're having to pay tax then they're the lucky ones.

Lucky??

You're just an idiot as you demonstrate time and time again.

[silent majority]

SM

You're right, it's 4% of estates. Do you have evidence that the richest exempt themselves from IHT?

The other figure I gave is still correct. Of all the estates below £1m, the average IHT take is 2%. For estates above £1m, the average IHT take is 17-20%.

So who benefits most from a cut in IHT.




Here's the point that you are not taking into account.

If you cut IHT, what else gives?

NHS funding?
Schools funding?
Defence funding?
Roads?
Rail?

Or do we put up VAT that disproportionately hits the poorer in society?

For what it's worth, under current rates and allowances, I would expect my own estate to be subject to a reasonably large IHT take. And that's fine. Because, yes, I've worked for my income. And I'd like my kids to enjoy some of that. And they will.

But I also acknowledge my responsibility to society. I grew up in a society that paid me to receive a degree education and a post-graduate qualification. That came out of the tax of other people. And I think I've got a responsibility to pay in so that bright kids from poor areas in future can get those opportunities.

It's about realising that your individual success isn't all about you.

BST,

There's lots of articles about avoiding IHT, most people use trust funds to do so, just Google a few. There's a reason offshore trusts exist in the Cayman Islands!!

And your point about what little % is taken by IHT only increases the reasons for doing away with it altogether! People spend money avoiding it and HMRC spend a chunk of money trying to get their hands on it. Its not an efficient argument at all. The tax take is so small its not worth considering.

Your argument though is a little thin and fails to answer my question. I pointed out that I've already paid tax on my earnings, but I'm struggling to understand why you think another 40%should be handed over to the tax man because I was careful with what I earnt. Again I could have spent it and this argument wouldn't be taking place, but I didn't. My debt to society? What debt is that? I didn't have somebody pay for my education like you, as a mature student I paid for my own, as well as paying for my kids education too.

I worked hard and had a very tough time putting both my kids through university at the same time! But I did it because I thought it was the right thing to do. And I believe that my savings, if I have any left, should also benefit them.

There's every possibility that I won't be leaving enough to worry about, it could well be that HMRC will not impose anything on them when I'm gone, but I don't know that because I have no idea how long I'm going to live for. As I said at the beginning, if we both die tomorrow then there'll be a bill. But I'm hoping I won't!!

[ravenrover]

I was a bit concerned at Jeremy Hunt's idea for an inheritance tax giveaway to the rich, but he assured me that it will be fully funded by cuts to disability benefits. So that's OK.


Parody Rishie Sunak on X

[BillyStubbsTears]

SM

1) You wouldn't be handing over 40% of your estate to the country's coffers, as you well know. You'd be charged 40% on any estate value over £500k, assuming your house is passed onto your kids.

2) As I'm sure you also know, even that amount can be minimised by giving gifts to your kids in advance of your death.

3) Yes, I'm sure the richest have ways of minimising IHT, but I've quoted (and you've dismissed) official Govt figures, that the average IHT bill for an estate under £1m is 2% and the figure for estates greater than £1m is 17-20%. So clearly and unambiguously this is a tax which, if cut, will massively disproportionately benefit the very wealthy.

4) You say my argument is thin? You don't even mention the more important points I made . First one is that we have to take enough tax from somewhere to balance what we spend on society. If you want to cut IHT, you have to either cut spending or put up some other tax. Which would you do?

5) You've also ignored what is, to me, the absolute key issue. There is a pretty incontrovertible economic argument that societies in which wealth is encouraged to accumulate within wealthy families are also ones which have poor social mobility. In simple terms, if some kids are well funded by their parents while other ones aren't, the wealthy will tend to get on disproportionately to their actual ability or future work ethic. It's familial instinct to want OUR kids to succeed, but that's not necessarily the right outcome for the society as a whole. So society has a right (I'd say, a sensible duty) to redistribute wealth rather than let it accumulate in small groups. IHT is one of those means.

And I know those more on the right will automatically scream that society has no such right to limit what we, each of us want to do. But of course it does. I have an instinct to give my kids an advantage. But I also have an instinct to want to copulate with every attractive female I see. I don't think anyone would complain about society imposing limits on my right to take action on that.

6) Finally, you talk about multiple taxation. We are taxed multiple times on many things. I pay income tax and NIC on my salary. I've just filled the car up with petrol. I paid VAT and fuel duty on that expenditure. I paid insurance tax on my car insurance payments. All of those taxes, I paid from money that I've already been taxed on.

[silent majority]

BST,

You're making a lot of political points and using the IHT argument to do so. But, as I've told you before I'm not interested in politics per se, I'm from the Billy Connolly school of voters, or not voters as is the case.

Your initial post was incorrect, and I pointed out at some length why it was incorrect in my particular case. I'm not in the top 4% that's pretty obvious and yet I get caught up in this when I don't see why I should. So,

1) Yes not 40% of the total, but still 40% over and above that is still a chunk of money that's taken many years to save.

2) I'm aware of that, but that's not my argument.

3) I'm not interested in the position of millionaires and multi millionaires, I'm interested in the normal working blokes like me! I haven't suggested that the tax cuts should affect everybody have I?

4) Its an important point for you!! But I have no position and I have nothing to offer when it comes to balancing the books.

5) Yes I have ignored this point, because I'm not interested in arguing broader economic issues. But if you do want to talk about social mobility then its obvious that I had a very shitty childhood! My kids have avoided that to a large extent and I'm immensely proud of that. But please don't try and make me feel guilty about it, that's the last thing I need!! If I had come from a family that was seen as more stable or economically privileged in any way then I could understand your argument, but I didn't. Creating a level playing field is utopia I'm sure, but taking money from the poorer amongst us is not the way!

6) I'm aware of multiple taxation obviously. What I'm talking about is the same pot of money being taxed twice. In your examples you acquired something in exchange for your cash and paid tax along the way, I don't have an issue with that. But if I pass my taxed income along to my kids it gets taxed a second time and then a 3rd time when they spend that cash. Hardly the explanation you were looking for.
 

[Branton Red]

All taxes are seen as unjust and unfair on those that have to pay them.

Only one thing is worse than suffering a personal perceived injustice and that's believing that your offspring are suffering an injustice.

That's why IHT garners such anger amongst many of those who believe that their estates will be hit by it.

And that's why Hunt and Sunak are making this tax cut. Electioneering. Not of the wider populace re the GE. But of the Tory membership ahead of the Tory leadership election to be held after their inevitable GE defeat.

The majority of Tory members are concerned (whether correctly or incorrectly) about IHT limiting their offspring's inheritance. Same as Silent Majority here.

If my parents died tomorrow their estate would be subject to IHT. Yet I'd still receive half (with my sister) of £1m before IHT would be applied.

I think I'd survive with little hardship on any loss through IHT I'd suffer.

Meanwhile there are those scraping by on the minimum/living wage who would benefit hugely in terms of living standards from a tax cut targeted at them.

A tax cut which incidentally would benefit the wider economy much more than an equivalent IHT cut. Given that the poorest spend a higher % of their incomes and so their additional income from said tax cut would generate more economic activity and therefore more economic growth.

[tommy toes]

Very good post Branton.

[Glyn_Wigley]

It could just as easily be argued that any inheritance your children get is income and should therefore be subject to Income Tax.

[danumdon]

At this moment in time IHT needs to be left well alone, it does need reform and simplifying to a level where its targeted at the very rich, someone who's on 40% tax band and just happens to have made a few bob from house values should not be the target audience.

What i would like to see is the government review the tax thresholds, we have a massive middle now in this country who are making up the largest part of the tax intake. people on salaries of up to 100k are not rich and they mostly don't have the assistance of clever accountants to avoid and evade the tax system.

What they should look at is bringing back the lower levels of tax bands that we had previously (under Brown) if they increase the thresholds of all bands this would allow workers to keep more of their hard earned and stimulate the economy at the same time which in effect generates the gov more tax take through the vat system.

We need a system i this country that sees more people contribute, the massive and growing class of people who struggle to make ends meet on minimum wage and then have to be assisted by the gov in working benefits is a massive problem, Gov should not be subsidising business or corporations and they should be forced to pay their workers a proper living wage. people need to know we all have a duty to contribute to society regardless of their level of income, even a token gesture for the lowest paid should make people think.

As a country we need to stop this drag towards a large part of society never having had paid employment because they can make far more on benefits, work needs to always pay more and pay a fair wage with a fair taxation system.

Raise the tax thresholds, have more bands and force major corporations and bushiness to pay their workers a proper living wage, in return they can have a reduction in corporation tax to stimulate the flea bitten economy in this country. That would be a far better use of whatever cash he's concocted from nowhere.

[normal rules]

The very rich in the uk are not stupid enough to get caught up in the nuances of UK IHT.
Companies like PWC, Deloitte, Ernst Young and KPMG have whole teams that deal with Estate and Asset management for the wealthy.
The very wealthy pay large sums of money to these teams to legally avoid paying very large sums on tax. Avoid NOT evade.
As an aside, the ONS stated in June 2023 that the average house price in the uk had risen to £306000. Not too far from the £325000 threshold.
Savills have also indicated that one in 40 houses are now worth over 1mil. Most being in the London area of course.
IHT will hit middle Englanders with estates between the threshold and less than a million, because most will blindly or naively stumble into the trap. Unless of course the family is struck by sudden unplanned tragedies. People are way too “honourable” around Estates and IHT IMO.
If you can, plan ahead. Get advice. Be prepared. Or just pay up if that’s your fancy.

I did a little check on rightmove. Within 5 miles of the Doncaster area there are currently over 1500 properties that exceed the £325000 threshold. Within 40 miles there are over 21,000. A cut in IHT would save a lot of families a lot of money across the country.

Branton. Might I suggest your parents get some advice from a good accountant. You and your sister could benefit. And if this causes you a moral issue, you could donate the extra benefit to a chosen charity. They can put their Estate into a trust, with you and your sister as trustees, thereby legally avoiding IHT when anything happens to them. Do your own research of course. Seek advice. Why pax IHT when you can legally avoid it?