Why are so many people against a tax they will never pay?

maddyone

Callistemon, just imagine how much a gift of £3000 would buy forty years ago. If people wish to gift to their children it is their right to do so. £3000 is not very much these days.

Especially since it is not per child but a total of £3,000.

maddyone

Callistemon, just imagine how much a gift of £3000 would buy forty years ago. If people wish to gift to their children it is their right to do so. £3000 is not very much these days.

People can gift however much they wish to whoever they wish. There is no restriction!

Where a gift over £3,000 pa MAY have an impact is if the giver dies within 7 years of making it AND the value for IHT purposes of giver's estate - taking into account such gifts in the previous 7 years - exceeds the IHT nil rate band.

As stated at the start of this thread, only a very small % of estates fall into this category.

Do you really think that the majority of folk actually decline all gifts to friends and family members?

BeverleyJB
Thanks for the explanation. However I know that, and that’s why we gift our children sometimes. Hopefully we’ve got more than seven years to live at this stage.

GrannyGravy13

Do you really think that the majority of folk actually decline all gifts to friends and family members?

Oops should read declare

I thought the IH tax was currently at £350,000 (for a couple that would be £700,000). How many of us actually own property that will sell at above that amount?

It is the amount ABOVE that sum that is then taxed at 40% not the whole estate value.

People can give away £30,000 each year and Yes, they do have to live a further seven years so that those amounts willbe inclyded in their estate. Can also give away as many as they wish of £250.00.

In my opinion it is not IH tax that is a problem, far more of such problem and one effecting far more house owners arethe Care Home payment rules and amounts.

BeverleyJB

maddyone

Callistemon, just imagine how much a gift of £3000 would buy forty years ago. If people wish to gift to their children it is their right to do so. £3000 is not very much these days.

People can gift however much they wish to whoever they wish. There is no restriction!

Where a gift over £3,000 pa MAY have an impact is if the giver dies within 7 years of making it AND the value for IHT purposes of giver's estate - taking into account such gifts in the previous 7 years - exceeds the IHT nil rate band.

As stated at the start of this thread, only a very small % of estates fall into this category.

Yes but the point is that if you die in less than seven years the beneficiaries of your gifts may be liable to pay inheritance tax on your gifts!

Also, as there are roughly 67 million people in the UK the so called small percentage runs into millions of people and will
continue to grow if they are not raising the inheritance tax threshold. It’s a way of getting more money for their coffers. Disgraceful!

maddyone

So you are avoiding Inheritance Tax after all, by leaving all your money to charity Dinahmo. I have never owned a house worth one million, let alone one and a half million, and yes, I have paid all my taxes. I do not intend to leave one penny to be paid as Inheritance Tax because I will have spent and given away enough to ensure I will have no Inheritance Tax to pay. I’ve paid my dues to the government, they won’t get anything more from me.

But I have never owned a house that is worth £1.5 million. We sold it for £85k so never benefited from the huge increase in value.

I see nothing wrong with leaving all our money to charity - at least it should benefit the right people (and animals)

bikergran

The £3,000 gift allowance is laughable. My dad will never ever pay IT no where near. But what he does want to do is treat the family to the odd holiday, or pay for gson driving lessons and maybe put towards a car. He bought myself a small second hand car as mine had conked out (it was 17 yrs old) the one we bought is 14 yrs old. So we haven't gone for some luxury car.

Yet the government dictates to my dad who has grafted since he was about 12 yrs old (yes 12 ) why should he not spend his money as he wishes. ( In reasonable amounts if he can afford to) whilst yes at the same time making sure he has enough money if he needs care, which he may well do as he is 87 and suffered with Parkinson for the last 15 yrs) Why must he only be allowed to gift £3,000 explaining this to him is very difficult he is of sound mind but cannot grasp that the gov tell him what to do with his hard earned money. No wonder the older generation kept it "under the mattress" so to speak!

There is such a thing as gifts out of income. If you father is treating his family to a holiday and paying for it out of his pensions/other income, rather than capital then that is allowed.

As I said above - look on the HMRC website for all the exemptions.

maddyone The figures and life circmstances you mention in many equate with my parents estate after my father died. His estate was valued at £650,000.

Neither I, nor my sister had any objection to paying IHT on his estate. It was an absolute fortune compared with how much probably half the population of this country leave when they die, in other words, little or nothing.

You will have no use for the money once you are gone, and on an estate like yours, even after IHT, there will be plenty of money left to significantly improve the circumstances of whoever you leave your estate to.

Yes

M0nica

maddyone The figures and life circmstances you mention in many equate with my parents estate after my father died. His estate was valued at £650,000.

Neither I, nor my sister had any objection to paying IHT on his estate. It was an absolute fortune compared with how much probably half the population of this country leave when they die, in other words, little or nothing.

You will have no use for the money once you are gone, and on an estate like yours, even after IHT, there will be plenty of money left to significantly improve the circumstances of whoever you leave your estate to.

But why is it not banded?

And why has the £3,000 not increased in proportion to average income?

Dinahmo apologies, you said your ex house is now worth one and possibly a half million. Of course, I’ve never owned a house that is now worth one and half million. The house we live in now is the most expensive we have owned, and it would not attract inheritance tax at the moment. We have a little in savings which might push us to or near the limit, but by the time we die (assuming it won’t be tomorrow) we will have made absolutely sure that those savings fall under the limit. We are comfortable. We have worked for what we’ve got and paid all our taxes with no attempt to hide any money (we really didn’t have enough to hide) and whilst you and others maybe happy to give yet more to the government (although you’ve said you’re leaving anything left to charity so you don’t pay inheritance tax) we are resolutely not happy to leave the government a single penny, and we won’t! It doesn’t matter whether others are poorer than us because we’ve worked all our lives in a not well paid or well appreciated profession and paid everything we were due to pay, like millions of others, and we have no wish to leave our money to anyone else except our children.

Monica nonetheless my parents estate came to nothing like £650,000. It was in fact very small. We are not in the same situation as you clearly.

I think franbern you mean £3000 per year could be gifted, not £30,000.

The IHT rate is £325,000 but there’s an extra £175,000 now that can be added.

The tax-free threshold has stood at £325,000 for many years, but rising property prices meant more and more people have been pulled into inheritance tax in recent years

To reduce this burden, the property allowance was introduced to help people leave property to family without being hit with large tax bills.

Crucially, you only qualify for this new allowance if your estate includes a property that you've used as a home at some point in your life.

Incidentally Monica, had my mother’s estate been valued at the sum your father’s estate was valued at, assuming your father was married before, the proportion of his estate subject to inheritance tax would be £50,000 which would be taxed at 40%. I’m not surprised your sister and yourself had no problem paying that tax because it left a fair amount for yourselves. My mother’s estate was small, considerably less than the figure you mention, and so I have not benefited from a huge injection of funds from my parents. Apart from that small amount, which I shared with my children now, rather than when I die, which will hopefully put us beyond the seven year limit, every other penny has been earned, tax paid, by ourselves.

GrannyGravy13

Do you really think that the majority of folk actually decline all gifts to friends and family members?

Gifts is a point that puzzles me, GG13.

Surely HMRC doesn't trawl back through years of your bank accounts post mortem to see what gifts you've made during your lifetime? Or even just the 7 preceding years.

I think that you would find that they do if they suspect tax evasion etc.

MaizieD

GrannyGravy13

Do you really think that the majority of folk actually decline all gifts to friends and family members?

Gifts is a point that puzzles me, GG13.

Surely HMRC doesn't trawl back through years of your bank accounts post mortem to see what gifts you've made during your lifetime? Or even just the 7 preceding years.

We keep a record of substantial gifts, no trawling needed.

A small book noting dates, amounts is sufficient, or so we've been told.

Yes Maizie, they do. they request bank statements etc if they suspect tax maybe payable. This happened to a friend of mine.

I know they do, especially if you are at any time self employed.
I had a bit of a todo over shares my mother had bought me as a child too.

The tax-free threshold has stood at £325,000 for many years, but rising property prices meant more and more people have been pulled into inheritance tax in recent years

I understand that if the property was held jointly this means that on the death of both owners £1million of the value is exempt from IHT. I'm sure that is the figure our solicitor told us.

Slightly at a tangent, but I have a friend whose house move is being held up because the property they are buying from an elderly widow was held only in the name of her late husband, so they are having to wait for it to be registered in her name before she can legally sell it.

Make sure your property is in joint names...

And the tax man can ask the banks directly about possible bank accounts not declared etc.

Follow the money! Unless you keep every penny under the mattress.

Norah

MaizieD

GrannyGravy13

Do you really think that the majority of folk actually decline all gifts to friends and family members?

Gifts is a point that puzzles me, GG13.

Surely HMRC doesn't trawl back through years of your bank accounts post mortem to see what gifts you've made during your lifetime? Or even just the 7 preceding years.

We keep a record of substantial gifts, no trawling needed.

A small book noting dates, amounts is sufficient, or so we've been told.

That's what our solicitor said, too. Make a note of substantial gifts.

Norah

MaizieD

GrannyGravy13

Do you really think that the majority of folk actually decline all gifts to friends and family members?

Gifts is a point that puzzles me, GG13.

Surely HMRC doesn't trawl back through years of your bank accounts post mortem to see what gifts you've made during your lifetime? Or even just the 7 preceding years.

We keep a record of substantial gifts, no trawling needed.

A small book noting dates, amounts is sufficient, or so we've been told.

It's a good idea to write a letter to the beneficiary of any gifts that you make that are over the annual exemptions. Give them a copy and keep one yourself. You just have to say " Dear ....... I'm giving you £20,000" and date it.

As a widow, I inherited my DH’s IHT allowance and also the main dwelling allowance and I completely agree with GSM and others. However, I think it’s particularly unfair on single and divorced people, where their threshold for IHT is, in effect halved and their estate is, therefore, more likely to incur IHT.