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

Payment of IHT can be deferred until probate comes through and there is available cash to pay it, probably after the sale of a house, but interest is charged.

Deat duties can arguably be siad to date back to the late 17th century.

This Wikipedia article en.wikipedia.org/wiki/History_of_inheritance_taxes_in_the_United_Kingdom, settles for 1780 and gives the history thereaafter.

So, grandetante your statement Also death duties when they were introduced were part of the political climate that made class hatred into an issue that has plagued British during most of the 20th century. is probably not entirely correct.

The ancient manorial system imposed death duties.

Germanshepherdsmum

Payment of IHT can be deferred until probate comes through and there is available cash to pay it, probably after the sale of a house, but interest is charged.

Yes. I don't know what your advice would be Germanshepherdsmum, but I was grateful that my mother had requested the services of both an accountant and a solicitor to sort everything out swiftly and smoothly after her death.

I believe the estate pays IHT, not those inheriting.

That’s correct Norah.

Maybe because everything you have as the average person in the street has been taxed already. Anything you accumulate stands against you when you need care when you are elderly. You pay your way all your life and then when you die you pay it again at 40% and if you have to liquidate the assets, you pay either for a bridging loan or interest on the amount you owe the tax man on top of that. You can't liquidate the assets before you get Probate, which also costs, and you have to pay the tax before it is granted. You pay that 40% on the amount you have on the day you die, even if the stocks and shares or house prices drop like a stone the next day. House prices are vastly different between the North and the South but no account is made of that even though you have been paying inflated prices for housing and living costs all your life in the South. The system is completely unfair and causes a great deal of stress for those left behind.

maddyone

Because many, many more ordinary people will be dragged into paying inheritance tax over the next few years due to the rise in house prices.

This is particularly true in the south east where average property prices takes many homeowners into Inheritance Tax.
If most of your wealth is tied up in your home then you can't even consider passing it on to your children more than seven years before you die.
Yet another good reason for downsizing and helping your children out whilst you are still here to see them enjoy it!

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.

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.

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 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 would see that as fair, cc.

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.

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?

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!

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.

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.

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.

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....

cc

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....

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.

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.

cc

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.

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

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.