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

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)

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!

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.

GrannyGravy13

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

Oops should read declare

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.

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

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.

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.

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.

I believe the exact amount is £325,000 before inheritance tax becomes payable. No inheritance tax is payable until both the parties in a marriage die, and so the joint amount on the estates of both parties becomes £650,000. If a person owns a fairly modest house in the south and has some savings, the couple will become eligible to pay inheritance tax at 40% after the death of the second partner. A joint estate of £650,000 which includes a house can in no way be described as rich. The argument that any profit on the house had no tax doesn’t hold water. The savings that have been held in an account that attracted no interest, or a minuscule amount of interest, means that that money devalued, but no one is suggesting that tax be paid back to the account holder because their money, on which tax has been paid, is now worth less. It would be ridiculous to suggest this, as it is ridiculous to suggest that tax be paid on the profit on a primary residence. Fine for a second residence, capital gains tax becomes payable anyway.
We are not rich. We own a house and have some savings too.. I have a very small inheritance from my mother’s death. She did not qualify to pay any inheritance tax since my parents were not rich either. It is not selfish to wish to leave any remaining house/money to your children. To suggest it is and that it should be left for the benefit of others, takes no account of ordinary people (we were both teachers) who have worked hard all their lives and bought one house to live in, who have paid their taxes all their lives, and who have received either no, or little inheritance themselves, should then pay further taxes to support others, when they have children to leave it too, in my view is totally and utterly unfair.
If a person is rich enough to own a house worth over one million, then they are very fortunate, but we who do not own such properties, nor any second properties, are entitled to wish to leave our small estates to our own children. There is nothing wrong with that.

Doodledog

*bikergran*, you can gift as much as you like, but if you die within seven years of a gift to one person of over £3000 the money (even if it is spent) will be added to the notional value of your estate, and if the total is then over the IHT amount it will be included in the taxed portion.

That is to stop people from giving everything away on their deathbeds (or on getting a terminal diagnosis) to avoid paying IHT, and like all IHT it only affects those with assets that put them in the top 7%. There are also numerous exceptions to this rule - see here:
www.gov.uk/inheritance-tax/gifts

Even so, it has remained at £3,000 for 40 years!

bikergran
Rather like the £10 Christmas bonus, something just quietly forgotten, hoping people will not realise it can be backdated a year, ie if not used in one financial year then £6,000 can be gifted the following year.

I know there are ways of giving away your money but like bikergran said £3000 a year is laughable.
It is also not true - see my post above. You can give as much as you like, but not in order to reduce the amount left over that may be liable for tax. If the total estate - including gifts above £3k per person per year given away within 7 years of death - is over the threshold, then those gifts will be taken into account when working out the IHT. If it is not, then they won't count.

I do not agree with the fact that the government hasn't raised the inheritance tax threshold for so many years , it's a way of clawing back even more money from the estates of the dead.
People have been encouraged to work and to save and some now find themselves in a position where they will fall into the inheritance tax bracket.
I know there are ways of giving away your money but like bikergran said £3000 a year is laughable.

I understand too you can give away larger amounts, but who can guarantee they will live seven years? so once again it can be clawed back if you are over the threshold. There is a sliding scale whereby the tax payable is reduced by percentages after 3 years, but they're still out to get you!

Good post bluefox I totally agree!

bikergran, you can gift as much as you like, but if you die within seven years of a gift to one person of over £3000 the money (even if it is spent) will be added to the notional value of your estate, and if the total is then over the IHT amount it will be included in the taxed portion.

That is to stop people from giving everything away on their deathbeds (or on getting a terminal diagnosis) to avoid paying IHT, and like all IHT it only affects those with assets that put them in the top 7%. There are also numerous exceptions to this rule - see here:
www.gov.uk/inheritance-tax/gifts

Paying IHT does not preclude leaving money to family and/or favourite causes.

My sister and I still inherited enough money from our father to substantially ease our retirement despite paying IHT because the sale of his house meant his estate became liable to IHT on a small proportion of it.

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!

Sorry missed a 0 - £200 000

As Inheritance only affects the largest estates and relatively few people are affected a the hoo-ha about it seems odd to me. I think it may be that people don't understand how it works. People whose estates will never be affected may not realise that it won't affect them and are getting exercised over a non-event. I heard a piece on the radio where some people seemed to think it was capped at £20000 - and some thought that therefore they lost everything above this sum. This is a bit like the confusion around the fuel cap it seems to me.
If we don't understand a prospective change we are bound to feel discombobulated.

Frankly, those estates subject to it aren’t those of people :hard done by" and the people and charities they love and leave behind still inherit - often a lot.

The wealth that is taxed is actually unearned by its beneficiaries. I think it's OK to tax this unearned income - after all, as said before, its left behind by only the largest 7% of estates.

As M0nica says, It seems to me to be absolutely reasonable that those of us fortunate enough to have left, basically, huge wealth compared to most, should, on our deaths make one final contribution to society by paying a tax on our wealth.

Prices are lower because those that have to sell take what the buyer can afford, higher interest rates mean he can afford less.
Prices will recover when interest rates fall.

Every country chooses to tax it's people in the way that works best for it. Inheritance in France is different. Sadly my own mother in the UK refused to allow any of her inheritance to be passed to me in France when I was marrying a Frenchman because she wanted to protect the money she was leaving.

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.

We have to pay a form of inheritance tax in France. Unfortunately, because we are child free what ever we leave to nieces and nephews or children of friends will be taxed at 60%.
There are some ways to avoid it, by taking out assurances vie for example but all our estates will go to charity - no tax there as long as you chose the right ones.

Perhaps because, unlike income tax, there is only one rate which is 40%, unlike income tax which is banded.
40% is a high rate, higher than any other unbanded taxes.
Many countries do not pay inheritance tax, many more have abandoned it.
If so few pay it, is it worth the bother?

It's a dishonest tax, better to pay a penny or two more on earnings in life than to take such a huge proportion of the estates of the dead.

I don’t think many people are against it. I think some people are and the Telegraph is working very hard at making mountains out of molehills.

I have mixed feelings, really. I think that people should be able to leave money to their children (or the donkey sanctuary), but I think that taxation should be used to level out the massive geographical discrepancies that surround house prices.

The cap on care fees is the same across the country, so someone with a house worth £1m in the South will be left with the vast majority of it to pass on, whereas someone who paid £27k in the same year for a similar house in the North could be left with very little to pass on, despite neither having worked for the increase in value, and the fact that wages are generally lower in the North, so the original £27k would represent a bigger percentage for the northerner. Either the care system or inheritance tax (or both) should be changed to equalise things. As it is, the North South divide will continue to widen, as inheritance compounds the existing inequality.

For that reason I think that IHT should be raised on the proportion of the estate over the median average house price, with savings treated separately.