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

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Norah

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I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

That seems fair enough, if adding the considerable costs associated with extensions, modern baths and kitchens, Mansard additions, extensive landscaping, conservatories, etc.

Those additions to the "basis" of the home one sells today v the cost basis of the one they purchased in 1959. Count on my vote.

I may be uneducated, but accounting is easy.

The trouble is that if the rules changed now not everybody would have the paperwork for any work they had done which added to the value - simply because your home has always been exempt from CGT. And, for example, would a replacement kitchen count? Probably not.

Replacement/improvement is a grey area. If you improve a property (ie put in a new bathroom where previously there none) then those costs are eligible for a deduction against CGT. Installing central heating, replacing single pane windows with double glazed are also improvements. Replacing an old kitchen sink with a new one, or repainting are not improvements.

Callistemon21

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maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

And you have only to look at Russia and it's oligarchs to see how unfair that system has actually turned out to be.

Millions murdered or starved to death.

Equality 🤔

I don''t know what comment your 'equality' comment has to do with.

The post glasnost Russia is not a communist state and has no pretentions to equality.

I recognise that the USSR did all those things in spades.

maddyone

Maizie I think the poster was referring to taking all property owned by a person after death and redistributing it via health and social services. So no one would keep any of their accumulated wealth after death, or their descendants wouldn’t. That is called Communism.

Interesting paper here\;

Abolition of Inheritance was issued to abolish inheritance by law and by will. However, this did not mean that the government could entirely obtain the property of the deceased.
For example, the decree provided that a small circle of relatives could still use an estate not exceeding 10,000 gold rubles. Therefore, the abolition of inheritance was incomplete and compromised from the very start. The government continued to compromise their goal after launch of the New Economic Policy by reintroducing the right of inheritance in the Russian Civil Code of 1922, although the government did not abandon the idea of the abolition of inheritance.

www.ier.hit-u.ac.jp/rrc/English/RRC_WP_N82.pdf

So the Soviets didn't achieve the complete abolition of private property.

If you need the money, or want to travel, or give some away, the only two options are to downsize, or equity release. I wouldn’t advise equity release but it would provide funds that are needed or wanted.

You can give away money in the amounts MaizyD says but it has to come from capital not income. I don't know about anybody else but I don't have a lot of capital to give away because we live in our largest Capital asset so, unless we get a mortgage, I can't give that sort of money away.

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maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

And you have only to look at Russia and it's oligarchs to see how unfair that system has actually turned out to be.

Millions murdered or starved to death.

Equality 🤔

The grey pound is enormously important for the British economy. It’s evident every single time DH and I pop out somewhere for lunch or afternoon tea. Or a visit to the theatre, the cinema, a hotel short break, even an EasyJet flight to a nearby European destination, in fact any place anywhere during the week or not in school holidays, the grey pound is there in full evidence. Lord knows what would happen to the economy without it.

Am I right in thinking that if the rules changed, the wealthy might just up sticks and go to live out their remaining days in another country? Wouldn't our own economy suffer from losing their spending power?

Maizie I think the poster was referring to taking all property owned by a person after death and redistributing it via health and social services. So no one would keep any of their accumulated wealth after death, or their descendants wouldn’t. That is called Communism.

You can actually give away as much money as you wish if you won’t qualify to pay inheritance tax.

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maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

And you have only to look at Russia and it's oligarchs to see how unfair that system has actually turned out to be.

I'm not sure how you worked that out, cc? What do the oligarchs have to do with it, apart from the fact that they managed to obtain Russia's resources extremely cheaply and make a killing from them...

100% IHT is nothing like communism. Communism, as practised, deprived living people of their land, money, property and 'redistributed' it. IHT is taking a portion of the wealth of a dead person, who doesn't need it any more, and returning it to the State (which is actually the ultimate source of most money). It's not depriving anyone of anything as, as so many people have pointed out, it is the estate that is taxed, not the inheritors.

I'm not saying I agree or disagree with this. Just explaining the rationale for thinking 100% IHT is a good idea.

We will probably pay inheritance tax and tbh I am more than happy to do so. Inherited money is fuelling the disparity between those who have and those who have not. I would like to see the a tightening up of the loop holes that allow the very rich to escape paying and I'm not talking about the middle class person with a house worth over a million, if they are married or in a civil partnership, they can pass £1m over to their children and grandchildren even if they downsize. That seems pretty fair to me. You can use the £3k each year to pass some cash on and individual gifts of under £250 can also be useful. If you have spare money from income, you can pass on a regular amount without it being liable as well. You do get hit if you are divorced or single with children and that's an injustice but you can still pass on £500,000 if it comes from property. For those who say they have "earned" and paid tax on the value of their home, I think that's rubbish (sorry), if you compare the cost of renting a similar property instead of owning and paying a mortgage, the home owner is so much better off (provided they have bought wisely). We currently live in a country where the rich get richer and the poor get poorer, I think that's the real injustice.

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Norah

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I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

That seems fair enough, if adding the considerable costs associated with extensions, modern baths and kitchens, Mansard additions, extensive landscaping, conservatories, etc.

Those additions to the "basis" of the home one sells today v the cost basis of the one they purchased in 1959. Count on my vote.

I may be uneducated, but accounting is easy.

We downsized to release capital from our home and will be keeping all the paperwork related to our new property, just in case the rules change....

Wise choice.

We have every paperwork since we purchased in the late 50s - there's always a chance something stupid could come up regarding the purchase of my grandparents home, imo.

Norah

cc

I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

That seems fair enough, if adding the considerable costs associated with extensions, modern baths and kitchens, Mansard additions, extensive landscaping, conservatories, etc.

Those additions to the "basis" of the home one sells today v the cost basis of the one they purchased in 1959. Count on my vote.

I may be uneducated, but accounting is easy.

We downsized to release capital from our home and will be keeping all the paperwork related to our new property, just in case the rules change....

maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

And you have only to look at Russia and it's oligarchs to see how unfair that system has actually turned out to be.

Norah

cc

I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

That seems fair enough, if adding the considerable costs associated with extensions, modern baths and kitchens, Mansard additions, extensive landscaping, conservatories, etc.

Those additions to the "basis" of the home one sells today v the cost basis of the one they purchased in 1959. Count on my vote.

I may be uneducated, but accounting is easy.

The trouble is that if the rules changed now not everybody would have the paperwork for any work they had done which added to the value - simply because your home has always been exempt from CGT. And, for example, would a replacement kitchen count? Probably not.

cc

I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

That seems fair enough, if adding the considerable costs associated with extensions, modern baths and kitchens, Mansard additions, extensive landscaping, conservatories, etc.

Those additions to the "basis" of the home one sells today v the cost basis of the one they purchased in 1959. Count on my vote.

I may be uneducated, but accounting is easy.

maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

There certainly wouldn't be any incentive to save or buy your own home. The holidays I would have!

maddyone

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

It doesn't work in practice either.

We would then have exceptionally good health, social care, eduction and public leisure services
No, we wouldn't.

Each person would then have to work for their living in a wonderfully supportive society.
Even the old, the sick, the disabled?

Stella14

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

I think that’s called Communism.

I would see that as fair, cc.

I think the real objection that I have to IHT is that tax has already been paid on income you received with which you bought the investments or property that you own when you die. However they will have increased in value since you bought them, so you could argue that you should pay CGT on the increase alone, not on the total value.

I have the controversial view, held by a minority of Economists, that inheritance tax should be 100% with all of it ring fenced for public services. We would then have exceptionally good health, social care, eduction and public leisure services. Each person would then have to work for their living in a wonderfully supportive society.

It would be fairer to base the inheritance tax on the inheritor. Perhaps an allowance of so much per year which could be carried forward, so that estates shared between several inheritors would be liable for less tax than one which all went to one person.

Doodledog
"...... However, money that is accrued simply by living in a house is not earned, and is massively variable by location. I think that this should be taxed, rather than total amounts. So if someone bought a house for £10k and it is now worth £200k there should be a formula that works out what the £10k paid at the time is worth in today's money, and the difference between that and the selling price should be taxed. Savings from income have already been taxed at source and again on the interest, so I don't think they should be taxed again on death; but unearned profit on property should, IMO be liable to tax, in order to avoid exacerbating existing geographical inequalities".

What you seem to be talking about when you mention tax on a property is simply Capital Gains Tax such as that paid on second homes or shares? There is no longer any indexing on such items you sell (thus making you liable for the tax on the gain) as this was removed some years ago.
So you're suggesting that people pay CGT on increases in their property price, but only if they die? I suspect that the higher rate of CGT isn't that different to the rate of IHT in any case.