euan2020 Posted July 5, 2015 Share Posted July 5, 2015 Sorry about that earlier, problems with my phone. I take your point, and I can see the objection against the same income being taxed twice (that ignores appreciation in property which is the bulk of most estates now, but leave that to one side). The fact is though that taxation relates to the individual and when someone inherits from an estate it is effectively deemed to be new income for them at that point. You may disagree with this, but it is a simple reality. Myself I think it is fair enough IF a reasonable allowance is made for the first slice of any inheritance. At the moment it is £325k (£650k for a couple) which I feel could reasonably be raised to £500k for an individual. As it happens, this is one of those issues where I find myself almost agreeing with Gideon, many would argue against any allowance. I take it you know that gifts (including cash) in excess of £3000pa are also taxable, subject to the seven year rule?I helped my parents out with all of this about 10 years ago, it really isn't difficult to structure things so that no inheritance tax is payable unless you are talking massive sums. My father-in-law is a retired accountant and management consultant and he has organised things, entirely within the rules, in such a way that his two children will end up paying virtually no tax on his estate of over £2m including a muckle big house in Ravelston. I've also started looking into this in Spain as we have a property there, and that is proving a bit more of a challenge. Above is incorrect though - its not income, its a transfer of wealth either in form of cash or assets, and its not the person inheriting who pays the iht - its the estate of the deceased - its not about the recipient its about the value/dstribution of the estate person inheriting only pays tax when for as an example there is clawback on prior gifts which are not exempt over the prior 7 years, or when they choose to pay the IHT rather than liquidate an asset they inherit ie a house. I guess a consideration for your father in laws children is they need to have similar tax planning, or they could get caught with an exposure in unfortunate circumstances Quote Link to comment Share on other sites More sharing options...
biffer Posted July 5, 2015 Share Posted July 5, 2015 Fix the housing market and it wouldn't be a problem anymore Quote Link to comment Share on other sites More sharing options...
euan2020 Posted July 5, 2015 Share Posted July 5, 2015 Fix the flipping housing market and it wouldn't be a problem anymore back to the banks and their salary multipliers, buy to let mortgages, and government quantitive easing - that's whats screwed the housing - but you are correct Quote Link to comment Share on other sites More sharing options...
buckielugger Posted July 6, 2015 Share Posted July 6, 2015 Its probably already been pointed out, but we have announcements of Osborne cutting benefits even further time after time, and then in the next breath giving staggeringly huge tax cuts to the already super rich. The overwhelming majority of people will never ever have million pound estates. And in fact most can only dream of reaching even half that amount. What Osborne and Cameron and the rest of this right wing shower are doing is obscene in the extreme. Quote Link to comment Share on other sites More sharing options...
biffer Posted July 6, 2015 Share Posted July 6, 2015 back to the banks and their salary multipliers, buy to let mortgages, and government quantitive easing - that's whats screwed the housing - but you are correct Also the lack of house building. Under imvesent in houaigm stock for thirty to forty years. Quote Link to comment Share on other sites More sharing options...
Pool Q Posted July 6, 2015 Share Posted July 6, 2015 (edited) Above is incorrect though - its not income, its a transfer of wealth either in form of cash or assets, and its not the person inheriting who pays the iht - its the estate of the deceased - its not about the recipient its about the value/dstribution of the estate person inheriting only pays tax when for as an example there is clawback on prior gifts which are not exempt over the prior 7 years, or when they choose to pay the IHT rather than liquidate an asset they inherit ie a house. I guess a consideration for your father in laws children is they need to have similar tax planning, or they could get caught with an exposure in unfortunate circumstances Fair point re first para, it is the estate that is taxed. What I meant was that effectively the person inheriting will receive less after tax is deducted than they would have otherwise so it feels like he/she is being taxed. But it is tax on the estate.Trust me the other stuff you mention is covered,and then some, by the arrangements my father-in-law has in place - he's forgotten more about tax and inheritance law than most accountants will ever learn in their entire careers. I've been in meetings with him where he has tied various specialists and advisers in knots Re a couple of other posts, while I think the threshold for what was intended as a tax on the rich should be looked at to reflect the changing realities in the UK, I'd agree now isn't the time. With £12bn worth of cuts to the welfare budget on the way as part of a Tory austerity budget, to increase inheritance tax thresholds (or reduce the higher rate of tax) is hardly a priority. Edited July 6, 2015 by Pool Q Quote Link to comment Share on other sites More sharing options...
euan2020 Posted July 6, 2015 Share Posted July 6, 2015 Fair point re first para, it is the estate that is taxed. What I meant was that effectively the person inheriting will receive less after tax is deducted than they would have otherwise so it feels like he/she is being taxed. But it is tax on the estate. Trust me the other stuff you mention is covered,and then some, by the arrangements my father-in-law has in place - he's forgotten more about tax and inheritance law than most accountants will ever learn in their entire careers. I've been in meetings with him where he has tied various specialists and advisers in knots Re a couple of other posts, while I think the threshold for what was intended as a tax on the rich should be looked at to reflect the changing realities in the UK, I'd agree now isn't the time. With £12bn worth of cuts to the welfare budget on the way as part of a Tory austerity budget, to increase inheritance tax thresholds (or reduce the higher rate of tax) is hardly a priority. I could certainly imagine - whilst a lot of specialists are very good, sometimes they dont ask the correct questions or can only give an answerr as good as the information you provide them with - I remember my dad 25 years ago saved my neighbours around £60K in Capital Gains tax that they were going to cough up, becuase they had sold a paddock linked to their cottage - he remembered that this had been zone/approved for housing 20 years prior and this should havee been the starting point of indexation (well 82 i think) with the consequence of no CGT. made a big difference to them since this last a lad who had spent his whole life as a farm worker, and his wife had been farm servant so certainly not accustoemd to wealth. As you have mentioned - a lot of people may not consider that they may inherit assets, and their own IHT planning needs to take account of their personal wealth + any inherited wealth which may occur late in their life Quote Link to comment Share on other sites More sharing options...
Lamia Posted July 7, 2015 Share Posted July 7, 2015 It is a form of income for the recipients though, anyone not wishing to pay tax on it doesn't have to inherit anything. I accept absolutely that allowances have to be made for family circumstances to some extent. Those with a longer memory may recall a thread on this from years back when Calmac Man went off on one and said there should be no Inheritance Tax threshold at all. At the time I think I argued for a threshold of about £500k (it's marginal of course, nothing below that) and I'd still say that is about right, although property prices in SE England and a few other places do distort things. And that's before any consideration is given as to how easy it is given to avoid. I didn't agree with Calmac Man at the time but now I do. Quote Link to comment Share on other sites More sharing options...
Orraloon Posted July 7, 2015 Share Posted July 7, 2015 I didn't agree with Calmac Man at the time but now I do. Does that mean that you think there should be no threshold ie inheritance tax should be paid on everything even if it's only £100? Quote Link to comment Share on other sites More sharing options...
Lamia Posted July 7, 2015 Share Posted July 7, 2015 Does that mean that you think there should be no threshold ie inheritance tax should be paid on everything even if it's only £100? I would be quite happy with 100% Inheritance Tax minus funeral expenses or for anything related to a partner to be honest. What makes me any more deserving of getting the money. There may be other exceptions I haven't thought of but as a general rule wealth getting passed on just continues the inequality but with those who haven't even worked for it. Quote Link to comment Share on other sites More sharing options...
Nobby Posted July 7, 2015 Share Posted July 7, 2015 I would be quite happy with 100% Inheritance Tax minus funeral expenses or for anything related to a partner to be honest. What makes me any more deserving of getting the money. There may be other exceptions I haven't thought of but as a general rule wealth getting passed on just continues the inequality but with those who haven't even worked for it. Very altrusitic Lamia, you are of course free to leave your entire estate to the taxman, personally id rather leave it to my kids with the taxman getting as little as possible. i've worked for my money and id like to leave anything left to whoever I want to get it. Ive also paid tax on my earnings and mortgage intererest so any raise in asset value is mine just like if the value fell the loss would be mine. We're all different ;-) Quote Link to comment Share on other sites More sharing options...
Charlie Endell Posted July 7, 2015 Share Posted July 7, 2015 Very altrusitic Lamia, you are of course free to leave your entire estate to the taxman, personally id rather leave it to my kids with the taxman getting as little as possible. i've worked for my money and id like to leave anything left to whoever I want to get it. Ive also paid tax on my earnings and mortgage intererest so any raise in asset value is mine just like if the value fell the loss would be mine. We're all different ;-)^^^ Quote Link to comment Share on other sites More sharing options...
MacWalka Posted July 7, 2015 Share Posted July 7, 2015 I would be quite happy with 100% Inheritance Tax minus funeral expenses or for anything related to a partner to be honest. What makes me any more deserving of getting the money. There may be other exceptions I haven't thought of but as a general rule wealth getting passed on just continues the inequality but with those who haven't even worked for it. What if the partner has spent most of their life raising the kids while the deceased was the breadwinner? What if the partner is disabled and unable to work? What if the kids are disabled and will be unable to work? Are you saying that the family of the deceased aren't deserving of the deceased's estate if that's what they wish? What about people who leave large sums to charities, should that be taxed? Do you trust the establishment/government/society to be able to look after a vulnerable family if they lose their breadwinner(s)? I understand Inheritance tax on folk with estates large enough to keep the value within the family without contributing anything to society, but a lot of people only work so hard in order to provide for their family and to leave their children with a better start in life that they had. If that gets taken away due to high taxes on say a house or a 5 figure sum being left behind, then a lot of folk will be hugely demotivated. Quote Link to comment Share on other sites More sharing options...
Khana Lagur Posted July 7, 2015 Share Posted July 7, 2015 I would be quite happy with 100% Inheritance Tax minus funeral expenses or for anything related to a partner to be honest. What makes me any more deserving of getting the money. There may be other exceptions I haven't thought of but as a general rule wealth getting passed on just continues the inequality but with those who haven't even worked for it. People with families work all their life to provide for them, so what's the problem in providing for them in death? Would you refuse an inheritance if you could redistribute that wealth? Quote Link to comment Share on other sites More sharing options...
Mitre Posted July 7, 2015 Share Posted July 7, 2015 I would be quite happy with 100% Inheritance Tax minus funeral expenses or for anything related to a partner to be honest. What makes me any more deserving of getting the money. There may be other exceptions I haven't thought of but as a general rule wealth getting passed on just continues the inequality but with those who haven't even worked for it. Eh? Are you serious? You no got any weans? Quote Link to comment Share on other sites More sharing options...
Pool Q Posted July 7, 2015 Share Posted July 7, 2015 (edited) I learned in the previous thread that this is a subject people feel very passionately about. I seem to recall, apologies in advance if this isn't the case, that FE was one of those who argued strongly against Calmac Man (who was for zero allowance) at that time. I was one of the few who, kinda-sort-of agreed, with Calmac Man, although I did (and do) feel that there should be a reasonable allowance to take account of normal people's lives. It is, or certainly was, meant to be a tax on the rich, not Jo(e) Bloggs who has grafted all his/her puff and owns an ordinary sized house somewhere. Edited July 7, 2015 by Pool Q Quote Link to comment Share on other sites More sharing options...
euan2020 Posted July 7, 2015 Share Posted July 7, 2015 wouldnt be any functioning farms in UK with a high IHT, or low IHT thresh hold - would all be state owned Quote Link to comment Share on other sites More sharing options...
Kirk Posted July 7, 2015 Share Posted July 7, 2015 Very altrusitic Lamia, you are of course free to leave your entire estate to the taxman, personally id rather leave it to my kids with the taxman getting as little as possible. i've worked for my money and id like to leave anything left to whoever I want to get it. Ive also paid tax on my earnings and mortgage intererest so any raise in asset value is mine just like if the value fell the loss would be mine. We're all different ;-) Agree with this. Quote Link to comment Share on other sites More sharing options...
ZoltanBuchan Posted July 7, 2015 Share Posted July 7, 2015 I've never really understood why inheritance tax attracts so much ire, while income tax seems universally accepted. Why does a tax on unearned income attract more opposition than a tax on directly earned income? (I don't have any opposition to income tax, btw, but to me it seems the more 'controversial' of the two) Quote Link to comment Share on other sites More sharing options...
phart Posted July 7, 2015 Share Posted July 7, 2015 Accumulating wealth isn't something i care about, so whatever threshold is set means next to nothing to me. A state coming in and taking "their share" of things just seems like being a state sanctioned brigand though. Just had a quick look and it seems to explain what it is, but not why it is. Quote Link to comment Share on other sites More sharing options...
biffer Posted July 7, 2015 Share Posted July 7, 2015 (edited) Inheritance Tax can be seen as genuinely redistributive in that it prevents the accumulation of wealth within a family over generations, which would make the rich more enshrined in their position. Wealth generates wealth as has been amply demonstrated over the last few years, so putting a brake on that is a worthwhile, left wing, progressive policy. If it's correctly implemented and avoidance schemes are prevented. Which they're not under the current legislation. Edited July 7, 2015 by biffer Quote Link to comment Share on other sites More sharing options...
phart Posted July 7, 2015 Share Posted July 7, 2015 Inheritance Tax can be seen as genuinely redistributive in that it prevents the accumulation of wealth within a family over generations, which would make the rich more enshrined in their position. Wealth generates wealth as has been amply demonstrated over the last few years, so putting a brake on that is a worthwhile, left wing, progressive policy. If it's correctly implemented and avoidance schemes are prevented. Which they're not under the current legislation. That's happening anyway, italics: Indeed, in theory it would work in practice not. Quote Link to comment Share on other sites More sharing options...
buckielugger Posted July 7, 2015 Share Posted July 7, 2015 Housing needs a major overhaul. Prices are at ridiculous levels. Someone should work out what average house prices were prior to the Thatcher era (which is when it all started going wrong) and how they compared to average wages at the time. Whatever that ratio is then that is what current house prices should be re-set to. If current average pay is say £25k and house price/wages ratio is say 3:1 then current average house prices should be reduced to £75k. That could be for say 3 bed semi with a range of values for larger and smaller properties as appropriate, and wwith leeway within each property type for poor to excellent quality Now people will say hang on my house is worth £150k, I don't want to lose half its value But the point would be ALL prices would be dropping so relatively it will make nk difference. It will just make housing affordable. Quote Link to comment Share on other sites More sharing options...
buckielugger Posted July 7, 2015 Share Posted July 7, 2015 And u bring in strict regulations that control house values for the future. It can be done in the same way rateable value always operated. Totally against tory market beliefs but they're the reason we have the horrendous mess we're now in Quote Link to comment Share on other sites More sharing options...
Glasgowmancity Posted July 7, 2015 Share Posted July 7, 2015 Now people will say hang on my house is worth £150k, I don't want to lose half its value But the point would be ALL prices would be dropping so relatively it will make nk difference. It will just make housing affordable. But what if you owe £100k on the house, is £50k just to be wiped off your mortgage? Quote Link to comment Share on other sites More sharing options...
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