adrianc
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Post by adrianc on Nov 21, 2023 16:11:09 GMT
Without it you end up with dynasty's accumulating vast wealth passed from generation to generation. You get that now. IHT is very easy for the very wealthy to avoid. The Duke of Westminster's entire wealth is held within a trust, so outside of IHT. Instead, it's taxed at a flat 6% every decade.
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Post by captainconfident on Nov 21, 2023 17:31:34 GMT
My mum and dad died, and my brother and me inherited close to a million quid, and didn't pay any IHT.
IHT is a tax on the rich, and is entirely necessary to rebalance some of the gross and harmful wealth disparities in the UK.
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Post by bracknellboy on Nov 21, 2023 17:43:57 GMT
My mum and dad died, and my brother and me inherited close to a million quid, and didn't pay any IHT. IHT is a tax on the rich, and is entirely necessary to rebalance some of the gross and harmful wealth disparities in the UK. The unfortunate part though is that it is a tax on the reasonably wealthy, but not the stinking rich. Because they can afford - and by nature have tax advisors in place for years to tell them how - to massively reduce their liability. And that most definitely is a problem. You could perhaps look to actually reduce the rate of IHT - so that it isn't so 'cliff edge' in nature and so that it isn't such a massive incentive to avoid - but at the same time close off a chunk of the loopholes that allow the wealthiest to minimise their liability.
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adrianc
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Post by adrianc on Nov 21, 2023 18:01:05 GMT
You could perhaps look to actually reduce the rate of IHT - so that it isn't so 'cliff edge' in nature and so that it isn't such a massive incentive to avoid I think there's a huge misunderstanding about it. It's 40% of everything ABOVE the threshold - currently £325k. Somebody leaves £350k, 40% is paid on the £25k only. Mum dies and leaves everything to dad, then that includes her threshold - so he has a £650k threshold when he dies. He leaves £700k, 40% is paid on £50k only. And that's before all the various ways to move assets outside.
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Post by bracknellboy on Nov 21, 2023 18:33:06 GMT
You could perhaps look to actually reduce the rate of IHT - so that it isn't so 'cliff edge' in nature and so that it isn't such a massive incentive to avoid It's 40% of everything ABOVE the threshold - currently £325k. Somebody leaves £350k, 40% is paid on the £25k only. Mum dies and leaves everything to dad, then that includes her threshold - so he has a £650k threshold when he dies. He leaves £700k, 40% is paid on £50k only. And that's before all the various ways to move assets outside. You are right that it appears that there is a huge misunderstanding about it. in the vast majority of cases that are subject to IHT, there will be a residential property involved. And spouse. The residential nil rate band is £175k, which like IHT allowance is transferable on first death. Therefore in the overwhelming number of cases, the threshold for IHT won't be £650K it will be £1m. And IHT will be on the marginal amount above that. So you are certainly right: it does appear that many don't get how it works, even those who are apparently certain that they do :-) On that final point though: at this level of 'wealth', very very few people will take advantage of the 'various ways to move assets outside'. None of which changes my fundamental view about the merits or otherwise of IHT versus other taxes.
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Post by bernythedolt on Nov 21, 2023 18:35:18 GMT
You could perhaps look to actually reduce the rate of IHT - so that it isn't so 'cliff edge' in nature and so that it isn't such a massive incentive to avoid I think there's a huge misunderstanding about it. It's 40% of everything ABOVE the threshold - currently £325k. Somebody leaves £350k, 40% is paid on the £25k only. Mum dies and leaves everything to dad, then that includes her threshold - so he has a £650k threshold when he dies. He leaves £700k, 40% is paid on £50k only. And that's before all the various ways to move assets outside. This £325k / £650k is the main problem. They haven't been increasing these thresholds with inflation, which is most unfair, so now they are capturing the huge middle class, not excessively wealthy, who were never really intended to be captured by IHT. By owning a house and a few savings, a large chunk of the population will now fall within the net. Simply owning a house in some areas is going to guarantee a massive IHT bill for the beneficiaries. This cannot be right. It was never the original intention and never previously the case. Even if you consider IHT is a reasonable tax to levy, the rate of 40% is far too punitive and completely unreasonable.
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Greenwood2
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Post by Greenwood2 on Nov 21, 2023 18:50:49 GMT
My mum and dad died, and my brother and me inherited close to a million quid, and didn't pay any IHT. IHT is a tax on the rich, and is entirely necessary to rebalance some of the gross and harmful wealth disparities in the UK. How did you manage that, well over the threshold.
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Post by bracknellboy on Nov 21, 2023 19:16:39 GMT
My mum and dad died, and my brother and me inherited close to a million quid, and didn't pay any IHT. IHT is a tax on the rich, and is entirely necessary to rebalance some of the gross and harmful wealth disparities in the UK. How did you manage that, well over the threshold. not if it was jointly, not separately. But doing it separately is of course still possible with breaks.
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james100
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Post by james100 on Nov 21, 2023 19:40:06 GMT
The extra allowance for residential property being passed down has always felt a bit off to me. It's like, if you're not sufficiently wealthy to own a property then you don't deserve the extra break to protect your assets  Same applies to pension accumulations. If we must have IHT at all, just set it for minority as originally intended, say £2m+ each on all assets and be done with it. I lean towards taxing at reasonably high tax rate, as flat and consistent as possible, ONCE, but we multiple layers of taxation here...overt, stealth...weird cliff edges, random exceptions...and of course the fact that it's considered perfectly acceptable for the wealthiest members of society to squirrel away their £ in the many sunny tax havens of the British Isles. No wonder people game the system. It's ridiculous, economically unstable and unnecessarily breeds resentment. Including mine having filed my tax return yesterday! |
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Post by overthehill on Nov 21, 2023 19:57:45 GMT
My mum and dad died, and my brother and me inherited close to a million quid, and didn't pay any IHT. IHT is a tax on the rich, and is entirely necessary to rebalance some of the gross and harmful wealth disparities in the UK. How did you manage that, well over the threshold.
No inheritance tax between spouses. So when the first spouse dies, the inheritance tax allowance is unused so 2 x 500k when the second spouse dies.
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Greenwood2
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Post by Greenwood2 on Nov 21, 2023 20:18:01 GMT
How did you manage that, well over the threshold.
No inheritance tax between spouses. So when the first spouse dies, the inheritance tax allowance is unused so 2 x 500k when the second spouse dies.
I thought 2 x £325,000. + maybe £175,000 for the house, do you get to do that twice? Edit: How the house is held?
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Post by captainconfident on Nov 21, 2023 21:54:19 GMT
How did you manage that, well over the threshold.
No inheritance tax between spouses. So when the first spouse dies, the inheritance tax allowance is unused so 2 x 500k when the second spouse dies.
This - 2 x 500k. There was the value of a house in this, you get an estate agent to give it a value, you are liable for tax recalculation if it sells for more, refund if less.
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Post by overthehill on Nov 21, 2023 22:27:03 GMT
No inheritance tax between spouses. So when the first spouse dies, the inheritance tax allowance is unused so 2 x 500k when the second spouse dies.
I thought 2 x £325,000. + maybe £175,000 for the house, do you get to do that twice? Edit: How the house is held? Assumption being any property is in joint names so 175k each.
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adrianc
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Post by adrianc on Nov 21, 2023 23:23:28 GMT
I think there's a huge misunderstanding about it. It's 40% of everything ABOVE the threshold - currently £325k. Somebody leaves £350k, 40% is paid on the £25k only. Mum dies and leaves everything to dad, then that includes her threshold - so he has a £650k threshold when he dies. He leaves £700k, 40% is paid on £50k only. And that's before all the various ways to move assets outside. This £325k / £650k is the main problem. They haven't been increasing these thresholds with inflation It's twofold. It's not been increased at all since 2009 - but even if it had been increased with inflation, property values have outstripped inflation... www.gov.uk/government/publications/rates-and-allowances-inheritance-tax-thresholds-and-interest-rates/inheritance-tax-thresholds-and-interest-rates
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Post by bracknellboy on Nov 22, 2023 6:14:39 GMT
No inheritance tax between spouses. So when the first spouse dies, the inheritance tax allowance is unused so 2 x 500k when the second spouse dies.
I thought 2 x £325,000. + maybe £175,000 for the house, do you get to do that twice? Edit: How the house is held? The residential nil rate band is an allowance per spouse, and is transferable on first death just like IHT allowance is.
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Same applies to pension accumulations. If we must have IHT at all, just set it for minority as originally intended, say £2m+ each on all assets and be done with it.