Over the IHT threshold? Reduce it down - or do nothing?

I found newnanny’s post pretty offensive and unnecessarily detailed given what some here have posted about their financial situation. Instead of boasting about all the properties she and her husband have, how many bedrooms they have, what is or is not owing on mortgages and their largesse towards family and just a couple of charities and a kid in Africa she would do well to pay attention to the huge IHT bill they will face if they don’t get rid pdq and give more to charity. I don’t think I have ever read such an unpleasantly boastful and tactless post.

I'm not sure about the whole blinkin' subject.
To start with, we have to remember that someone who inherits has actually lost someone dear. Some of us much sooner than we would have thought. So, for those heirs, paying IHT under the circumstances is just one of those things which you tend to do without question.
In an effort to do things right by the book it's probably best to get professional advice, though I don't doubt that declaring every little thing does attract some taxation which could easily have been avoided surreptitiously hidden somewhere.
If you've been heavily clobbered not once, but twice, you then start to have a different outlook on things when administering your estate and dishing things out for the next generation.

newnanny

I'm fortunate be ause we have a 6 bedroom house we've paid the mortgage off, a 7 bedroom holiday home in France with no mortgage and 11 btl houses. 2 with no mortgages and the others with low mortgages less than £70k left on 5 of them. None have more than 100k left on them. DH and I both do the gifting to my DC. We give them 2 payments of £500 each a year. We gift DGS's £250 each per year. I also give them generous amounts for birthdays and Xmas and DH and I pay for any family holidays when we go to our holiday home. I've helped out DC with deposits for their mortgages and bought DD a used car when her car engine blew up last year, to enable her to get to work and drive the DGS's around. I've also bought my younger sister sister we ho isn't too well off a used car when hers failed MOT and she needed one to get to work. I've helped out my niece when she went to uni by paying her a monthly direct debit for 4 years tomhelp her to live on as I knew my sister didn't have much to give her and I knew most other students would get financial help from family. I've helped my nephew out to pay his mortgage when he had a car crash several years ago fractured his spine and he couldn't work for about 9 months and he only got statutory sick pay from his employer. I'd rather help my family out with funds rather than paying even more tax to government. DH is still working until the end of March this year when he retires and he's been paying 40 percent tax for years. He says 40 percent on his share of btl houses too so we think we pay our fair share of tax. If we don't need to go into a home for care I know we will end up paying IHT. We live quite well. Its cold we put heating on. We have cruise holidays We love. We sponsor a child in Ghana. I donate monthly to Cats Protection League and DH donates to Centre Point, a homeless charity.

Your "detailed" post tells us you are extremely financially comfortable newnanny . If would echo what Germanshepherdsmum said and consider your future tax position carefully , including the 7 rule , if gifting to your children is something you are thinking about .

We each have an allowance of £325k and I inherited my husbands when he died. So £650,000 before inheritance tax. Like other grans the children will inherit my flat and any other investments. In my forgetfulness I think the govt added another allowance and seem to recall that there would be no inheritance tax to pay. We put our savings into ISAs so no tax payable. In the meantime, I am still getting taxed as my state and work pension are put together for tax. In the meantime I do not need much so I give quite a bit to charities mainly for dogs, heart, Salvos and crisis at Christmas. I have had a good life and if there is tax to pay so be it. I never inherited anything as my parents had little. I do not complain. BTW we did buy twin beds with electric controls and we got them VAT free because of health reasons.

Oh to have that problem

When we downsized we were left with a balance of cash which we've used to help all our children to move to nicer/bigger homes. I should stress that we're left with enough cash to live comfortably, you need to be careful not to give away more than you can really afford - and to live for seven years!

I would suggest that you do a little tax planning asap.

I'm fortunate be ause we have a 6 bedroom house we've paid the mortgage off, a 7 bedroom holiday home in France with no mortgage and 11 btl houses. 2 with no mortgages and the others with low mortgages less than £70k left on 5 of them. None have more than 100k left on them. DH and I both do the gifting to my DC. We give them 2 payments of £500 each a year. We gift DGS's £250 each per year. I also give them generous amounts for birthdays and Xmas and DH and I pay for any family holidays when we go to our holiday home. I've helped out DC with deposits for their mortgages and bought DD a used car when her car engine blew up last year, to enable her to get to work and drive the DGS's around. I've also bought my younger sister sister we ho isn't too well off a used car when hers failed MOT and she needed one to get to work. I've helped out my niece when she went to uni by paying her a monthly direct debit for 4 years tomhelp her to live on as I knew my sister didn't have much to give her and I knew most other students would get financial help from family. I've helped my nephew out to pay his mortgage when he had a car crash several years ago fractured his spine and he couldn't work for about 9 months and he only got statutory sick pay from his employer. I'd rather help my family out with funds rather than paying even more tax to government. DH is still working until the end of March this year when he retires and he's been paying 40 percent tax for years. He says 40 percent on his share of btl houses too so we think we pay our fair share of tax. If we don't need to go into a home for care I know we will end up paying IHT. We live quite well. Its cold we put heating on. We have cruise holidays We love. We sponsor a child in Ghana. I donate monthly to Cats Protection League and DH donates to Centre Point, a homeless charity.

Posters are talking about savings, but if they own their home and are mortgage free, that is likely to be worth a lot more than their savings. That makes downsizing a sensible thing to do - and IHT downsizing relief means that the relief which would have been available based on the value of the old home is the same for the new home.

It seems to me that more could/should be done to iron out these inequalities via the tax system before such wealth accumulates.

People say that they have worked hard for their money and resent the thought of it going to 'the govt'. But if those people have an extended stay in hospital, the nurses who care for them also work hard but don't earn anything like enough to accumulate large savings, and often rely on public services funded by taxation. Is this just?

IHT is a great leveller. I would like to see it hypothecated, so that the govt uses it in visible ways.

Exactly

Ditto Curlywhirly.

We donate to 5 charities on a monthly basis and sponsor a child in Africa. We help out our children quite a lot with expenses for house updates/renovations and take them, their partners and our grandchildren on holiday once a year. As long as we have enough savings left for a comfortable old age, we'll continue to do so. I know we are in a very fortunate position to be able to help our children whilst we are still still alive - we were both brought up by parents who had nothing, and everything we have has been gained through hard work and a bit of luck! In a nutshell - keep enough savings (if you can) to maintain your standard of living but give the rest away!

After my dad died, my mum moved south to be near to me, and she moved into a sheltered apartment, but she bought it out of the funds released when she sold her and dad’s house. She loved it, lots going on, and very safe, and near family. Even during Covid she was okay until she fell and broke her shoulder. That was the beginning of her end.

It’s complicated Doodledog as we found out when looking for a home for my mum. Councils will only pay up to a certain rate, which is several hundred pounds per week less than fees paid by residents. Consequently councils will not place a person into a more expensive home, which from our observations (we visited several) were not as nice as the more expensive homes and seemed to have a lot less going on for the residents to take part in. If a person has been resident for a minimum of at least a year, council funding would allow the resident to be left in the home because it’s too disruptive to the elderly person to be moved. However the council will still only pay the reduced amount and so homes want to be sure that the person has sufficient funds to self fund for a minimum of a year. If they self fund for say, six months, the home will insist that the resident be moved to a cheaper home, which is very unsettling for an elderly person. As I said, it’s complicated.

We visited one cheaper home and my husband said to me as we left, You wouldn’t put a dog in there would you?’

I was under the impression that free homes were the same as ones with fees, and that fee-paying residents were side by side with those getting free care. In fact the fees are higher for those who pay them as they subsidise the free places*. Is that no longer the case?

I remember my grandparents were in that situation, when they went into sheltered housing (not care, I realise) after my grandad had a stroke. They had to pay until they had nothing left, and were next door to an old neighbour who hadn't saved a penny whilst my grandparents did without for decades to save 'for their old age'. I wouldn't have wanted to see Betty-next-door go without, but it was a real slap in the face for my grandparents, as they were so proud of doing as much as they could to look after themselves, whilst Betty went on holiday and ran a car etc.

*I know that the places aren't actually free. They are paid by councils out of council tax, so the fee-payers pay twice - once through their CT, and again at point of use. Something really needs to be done to make the system fair.

I know someone who said she’s getting rid of all her money so if she or her husband need care, they’ll get it free. I asked her if she’s seen the free homes! Anyway she’s got a house and she can’t rid of that.

If we need care Katie and there’s no money left, we will use the house. The children don’t/won’t need it. Anyway I think we’re below the limit to pay IHT even with the legacies, but the problem could arise if the house increases in value a lot. I don’t want that to happen.

You can spend on comforts, holidays, house improvements and luxuries if you want, it’s your money spend it as you wish.
Be very careful with gifts if you need care they may be reclaimed there is no time limit to this.

We are living now into our 80s and beyond our beneficiaries are often retirement age, do consider helping younger members of your families sooner.

We’ve been lucky enough to inherit two, not by any means huge, legacies last year. The downside, my mother died and my father in law died. Neither was rich, but both managed to buy houses when they were married, normal houses, three bed semis, and both had saved a bit too. They wouldn’t spend too extravagantly and as both ended up in care for their final year, they had sufficient resources to self fund, which meant we could find lovely homes for them. My mother’s cost £60,000 for the year, but I think it would have been more now. I was just glad she was in a nice place. But I’m not going to leave that hard worked for money for the government to squander, I’m sharing it with my children.

"Call me cynical, but I always wonder whether the government watch (or even start) threads like this near election times to judge the reaction of posters on different platforms."

I don't think you are cynical Doodledog but do beware
The Rabbit-Hole of Madness

The govt probably watches everything ! You're right there. But with so many more older people now predicted to sit over the threshold IHT wise, without even realising it, even with the the non taxable transfer between spouses, then seems likely that (with the house price values having gone up and up in the past making huge profits for some ) this discussion is important. It's always assumed that the whole family is well-off if people fall into that bracket - but the younger generations in same families can be certain they will probably never afford to buy, unless on top earnings. So, unlike in previous decades what happens going forwards to pass more support down the generations is important - unless people prefer savings to go to the taxman for other things, fair enough, people have different view on this. Was reading yesterday that they are paying some rail employees (200 of them ) full pay for a Govt project that doesn't yet exist. Reported in i newspaper a couple days ago. Doesn't fill you with confidence.

Call me cynical, but I always wonder whether the government watch (or even start) threads like this near election times to judge the reaction of posters on different platforms.

If we need residential care, we’ve got the house.

We are already spending and don’t scrimp by any means on what we buy/do and we share what we have with our children. Two of them absolutely don’t need any help so we buy nice gifts and we’re generous with all four of our grandchildren. As our daughter is going through a difficult divorce and has an ex who refuses to pay anything towards the children, we help her out a lot. We actually bought her a new car for Christmas because the car she was driving was unsafe, and we want her and the children safe. I couldn’t sit on money and watch my child and grandchildren suffer in any way. And I don’t want a single penny of mine going to the taxman. We’ve both paid our taxes all our lives and still pay tax now. It’s enough.