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

GSM I have left money to charity, but I want to keep flexibility in my life to the end. If my parents are anything to go by, even if I live into my 90s I will still be living at home. Although the house we intend to buy will not cost as much as the one we are selling, it is still likely to be valuable, and we want to feel we have enough capital to pay for any care I may need and atill be able to splash out on anything we want.

If that means we pay IHT, so be it. These days can we even by sure that any charoty we leave money to will spend it wisely.

Germanshepherdsmum

Whatever I have when I die is for my husband if he survives me and then for my son and his family, plus the charities I support. I don’t wish the government to have one penny if I can help it. It’s not for the benefit of ‘the common weal’ as you put it, MOnica - whichever government is then in power will spend or waste it as they choose. Name the charities which you would wish to benefit - almost certainly none of them receives any money from the government. Are you happy to pay for the then equivalent of HS2, Liz Truss’s protection and pension or a hundred and one things which do Joe Public no good whatsoever?

Exactly.

Germanshepherdsmum

Whatever I have when I die is for my husband if he survives me and then for my son and his family, plus the charities I support. I don’t wish the government to have one penny if I can help it. It’s not for the benefit of ‘the common weal’ as you put it, MOnica - whichever government is then in power will spend or waste it as they choose. Name the charities which you would wish to benefit - almost certainly none of them receives any money from the government. Are you happy to pay for the then equivalent of HS2, Liz Truss’s protection and pension or a hundred and one things which do Joe Public no good whatsoever?

This ^

Whatever I have when I die is for my husband if he survives me and then for my son and his family, plus the charities I support. I don’t wish the government to have one penny if I can help it. It’s not for the benefit of ‘the common weal’ as you put it, MOnica - whichever government is then in power will spend or waste it as they choose. Name the charities which you would wish to benefit - almost certainly none of them receives any money from the government. Are you happy to pay for the then equivalent of HS2, Liz Truss’s protection and pension or a hundred and one things which do Joe Public no good whatsoever?

I have paid plenty of tax and continue to do so. I have no intention of paying more than I am legally obliged to pay, whether in life or in death

Agree100%

M0nica, I worded my thoughts badly on this topic and I agree with your comment.

Susie42 it is not how much people are taxed, but what is left after taxation that most affects spending patterns, that and their hopes/fears for the future.

M0nica
Thanks for the link on the Laffer Curve which makes for interesting reading, however, I do feel that if people think they are being taxed too much they won't want to spend on anything other than essentials.

We're not particularly interested in allowing our excess above IHT limits to be squandered by the government. Our chosen charities will be receiving our money for their support.

I've spent my entire married life voluntarily keeping the books at our Church, I know what they do with donations - good works.

We've saved diligently for our end of life care. Our home has little value though mortgage free for over 35 yrs - will see us out and help pay towards our care as needed. No need to sell, just continue on.

Taxes have already been paid on everything we possess. We've given quite generously to our children and grandchildren whilst we're alive, they'll each receive an identical small sum at our passing. Remainder to Church charities.

So, we spend now (good documentation) on our family and charities, saving for our care, no need to avoid IHT as we'll fall below any (new?) limit.

I used to work in Social Research and worked on one project which involved asking people how 'well off' they felt compared to their neighbours - and they almost always fell into the trap of comparing house size! And even if at their advanced age they owned a home outright and had savings and investments and pensions (they shared all those details, it was a longitudinal study) they still felt the young family with a somewhat bigger house down the road must be a lot wealthier. Bizarre.

Romola i agree with you. We will end up paying IHT on our estate as it is now. We are taking no exceptional steps to avoid it. We have been very fortunate in lifeand I am willing to pay tax towards the common weal in death.

I have paid plenty of tax and continue to do so. I have no intention of paying more than I am legally obliged to pay, whether in life or in death.

My feeling is that if your heirs (AC and GC) are already well provided for, maybe partly because you have already passed on £££, I'm not going to start setting up elaborate schemes to avoid IHT.
I feel I'm privileged to be in a position to pay taxes. If everyone avoided taxes, how would the government provide the public services we rely on? And I fear that spending on defence will have to rise in the coming years.

Susie42 The Laffer Curve has been quite extensively challenged and debunked.

I will give one link ctmirror.org/2018/01/18/why-the-laffer-curve-is-garbage/ There are hundreds more.

Charitable bequests are taken into account before calculating IHT, if you have no close family.

I’ve just been reading about the Laffer Curve which states that there is a maximum tax take after which revenues start to fall.
As I understand it means that if personal taxes are reduced the more people feel able to spend thereby boosting the economy.
There’s a lot more detailed information on the internet.

We will be caught by IHT and, as we have no close dependants, will probably go down the equity release route.

I think everyone should spend when they need to and not have to worry about the taxman or the need to preserve money in case they need care. Re equity release, my husband has always said we should never do it. The terms of repayment are dire. If we need care we’ll use the house if necessary, or any monies we have. If one partner is still living in the house then the fees can be allowed to be paid when both are gone I understand but I expect the interest would be huge. I know my sister and her husband had to pay over £20,000 in outstanding care home fees, from the sale of the house when her mother in law died. I don’t know how other countries arrange this or if they allow gifts to be given tax free. In the UK the IHT starting point hasn’t risen for donkey’s years, despite the rise in property values. David Cameron promised to raise the starting point on IHT when he became MP but he didn’t. What he did do as understand it, was introduce the spouses rate, the £175000 ( I think that’s the figure) that can be used by people to leave their houses to their children. I think the house must be left to the children otherwise the extra amount is not applicable, so it means we can’t leave anything to our grandchildren otherwise the rate drops back to the £325000.
I think.

maddyone

kircubbin2000

Maddyone.
I was referring to people who will fall within the Inheritance tax bracket who have a large sum. Its sickening to see it disappear after family have tried to build up an inheritance for kids but have not taken financial advice.

Ahhh, yes, I agree kircubbin.

My husband who has always been self employed commented on this, “it’s not hard to make money but it IS difficult to hang on to it.

His point is there is always someone who needs paying including the taxman, so you don’t spend when you don’t NEED to.

According to advice columns people are allowed (for tax purposes and IHT planning etc) - to gift £3000 away every year and if they haven't used the allowance last year it can be carried over - ie £6000.
Plus £250 as many times as they wish to gift - and £2500 for a granchild's wedding etc - All those things are tax exempt. Plus any monthly surplus income above bills/needed to maintain comfortable lifestyle can be given away without attracting tax scrutiny. As I understand it. Best to check!!
The £3000 gifting allowance figure strangely hasn't changed for years and years and hasn't kept up with inflation - so the govt isn't exactly encouraging people to gift - they'd probably rather reap the benefits through taxing where they can, when over the thresholds.

Other question:
Separately - re care home fees, the equity release market has been busy for years -eg for those who want to release cash from their homes for holidays /a new motorhome etc - and since arguably that depletes funds , isn't that in danger of being considered a ''deliberate deprivation of assets''? The biggest loser from equity release schemes is after all (potentially) councils who end up paying for care costs if there's nothing left of the house. Anyway that's a separate matter but I can't help wondering if they have similar rules in other countries and whether equity release is as big a thing in other countries. The companies use very strong selling techniques - we have the paperwork we sorted for a relative and I think they referred to it a 'cash reserve' and sent regular letters saying 'you haven't used all your cash reserve yet' as if the money had already been given to them and was just waiting to be used , whereas in fact it was just another (expensive) loan each separate time money was withdrawn!! We found several mobility scooters which weren't needed. It got pretty frightening for them in the end- and towards the end the 'tone' of the letters was less friendly and more about the cumulative interest!! Money is a scary thing.

kircubbin2000

Maddyone.
I was referring to people who will fall within the Inheritance tax bracket who have a large sum. Its sickening to see it disappear after family have tried to build up an inheritance for kids but have not taken financial advice.

Ahhh, yes, I agree kircubbin.

Germanshepherdsmum

In my experience those with the most money are the least likely to spend it.

That's why they end up with so much!

Oh yes, I don't doubt that, but I was thinking about the idea that those who pay are "keeping" those who don't.

It is the case MissA. Here’s a report which gives the figures, the chance of needing residential care rises as you grow older, but the number of people in the age group diminishes too, so it’s 4% of the total over 65 population.
www.mha.org.uk/get-involved/policy-influencing/facts-stats/

I think that's a misconception, although I've seen it said by people who will probably know more than me (that's everyone!)

There’s only a 4% chance that any one of us will need residential care after the age of 65 winterwhite. Perhaps the IHT of those who choose to hang on to their savings already pays for the care for those who don’t?