IHT- how to avoid if you have enough wealth

Inheritance tax doesn't go a long way towards equalising things, but it makes some inroads.
I wish the government -any government, would detail exactly how they use IHT towards equalising things and how it is not used to pay administration staff, whose salaries would soon eat a hole in funds raised.
Certainly IHT makes the rich poorer, so I suppose that’s a levelling exercise, but how does it make the poor better off?

I wouldn't object to an audit of all governments - an annual appraisal, if you like. Have them show what they spent and the return on investment. If it's too expensive to do annually, then at least once in a parliament would be good, along with which manifesto promises have been met.

Hang on a minute. So are we now implying it is just a "small portion" of your estate in the bigger picture of things? Not much, just a smidgen 40% of the total amount?

What strikes me is the fact that those who inherit will these days probably already be in their 50s or 60s, at a time when wealth inequality is already firmly established due to one's own efforts and achievements. So changing the amount of IHT to be paid won't actually be sufficient to level up at all.

Escaped
, it’s not levelling up, it’s levelling down. No evidence that poor people become richer because of IHT.
Again, the hardest hit will be those who just scrape into IHT. Those who can well afford it will also be able to afford advice on how to minimise the impact.

Yes, Mollygo, exactly.

It's not 40% of the total amount. It's 40% of what's left after the million pound allowance .

The levelling up will come from what the older heirs can't pass on to their own offspring when they are in their 60s, will come from having more money circulating in the economy (either from the 'spend spend spending' of those wanting to avoid paying, or from the government having more money to spend on things like education and health.

Mollygo

Escaped
, it’s not levelling up, it’s levelling down. No evidence that poor people become richer because of IHT.
Again, the hardest hit will be those who just scrape into IHT. Those who can well afford it will also be able to afford advice on how to minimise the impact.

Oh come on! Are you seriously suggesting that actual millionaires can't afford to take financial advice? Most IFAs will happily take on clients with a portfolio of > £100k.

escaped Hang on a minute. So are we now implying it is just a "small portion" of your estate in the bigger picture of things? Not much, just a smidgen 40% of the total amount?

I believe, currently, assuming a married couple with home, it's 40% on the total amount of assets which is over £1 million --

Mollygo

Escaped
, it’s not levelling up, it’s levelling down. No evidence that poor people become richer because of IHT.
Again, the hardest hit will be those who just scrape into IHT. Those who can well afford it will also be able to afford advice on how to minimise the impact.

Oh dear.

Where have I suggested that?
Don’t you think millionaires including Sunak and Starmerfit into the group I mentioned?
Those who can well afford it will also be able to afford advice on how to minimise the impact.

Happy to be corrected this time, @ Doodledog!

An even smaller amount then. Hardly going to make a huge difference to the coffers, so not "depriving the government" as such.

I'd be happier if it were a tax earmarked for the financing of old-age care. I might just start agreeing to it a tiny bit then. It would have more appeal than death 💀 duties!

Doodledog

Norah

GrannyGravy13

I never thought the UK would become a country where bettering oneself and accruing savings are viewed as a revenue stream for the Government on your death as opposed to ensuring your heirs will not become dependent on the state…

What is the point!

This is logic - seems not highly valued.

Really? We have had IHT in the UK since 1894 It's not a new thing that people never thought would be something that could happen here.

I agree (as I've said) that helping our children is something that most parents want to do, and IMO there is nothing wrong with that. Unfortunately, after 14 years of seeing inequality rise and the gap between rich and poor widen we are increasingly seeing the only way young people can buy a house (for instance) is if they have financial help from parents. More and more basic things now cost money - as well as housing there is dentistry, timely medical care, even education in some areas where there are no well-performing schools. Those who inherit large sums can afford all of that (and that's before you start on luxuries), whereas those who genuinely make their own way via their own work will struggle. Inheritance tax doesn't go a long way towards equalising things, but it makes some inroads.

There is also the fact that the rich don't spend anything like as much of their income as the poor, and money in the bank is not being productive for anyone other than the owner. It is the poor who have 100% of their income taxed one way or the other - whether by income tax at source, or because they have no choice but to spend all of it on necessities. Again, inheritance tax goes some way to ameliorate this discrepancy. Not much, as only 4% of the population pay it, but some way is better than nothing.

True. In the 40s Estate Duty was 60-80%.

Whew, what are we complaining for?

I think I paid 30% first time round on the inherited amount in 1980. If I weren't good at Maths, I could say that it will make a total of 70% upon my death!

No-one has ever left enough to make a great difference to my life, although I did put a small inheritance from my parents towards a touring caravan. Second-hand.
Ditto DH - a small amount but we paid off our mortgage with it as the endowment policy failed to make what was promised.

Tax the wealthy in life.

I need a good solicitor to explain this to me! Anyone?

A couple of times on this thread we've been told that we won't be the ones paying IHT because we will be dead, but the children will be paying it. I thought the tax is paid from the estate in the first instance, so it will actually be the benefactor paying it before the recipients get it after all?

escaped

I need a good solicitor to explain this to me! Anyone?

A couple of times on this thread we've been told that we won't be the ones paying IHT because we will be dead, but the children will be paying it. I thought the tax is paid from the estate in the first instance, so it will actually be the benefactor paying it before the recipients get it after all?

Just how one wants to express what happens.

The estate pays the tax before the proceeds are passed to heirs.

Who is actually "paying" the sum is up for debate.Money in, money out. If my estate is taxable and I'm dead - who is paying? Me? My children? The estate? Answer: hair splitting.

Again, the hardest hit will be those who just scrape into IHT

Er, no not really.

Some of the hardest hit turn up every week where I help out. Professional people, parents, people who have had a run of bad luck.

escaped

I think I paid 30% first time round on the inherited amount in 1980. If I weren't good at Maths, I could say that it will make a total of 70% upon my death!

I'm definitely no mathematical whizz, but I don't think that compound whatists work like that.

Let's assume your parents left you £100100 (or however you express £100 over a million). You were charged 30% on that, so paid thirty quid and inherited a million.

You then invest that million pounds, and (as all of us do) add to it what you earn, plus the interest it attracts that most people don't have.

Again, for the sake of argument, ;et's assume that you have lived a great life, and spend spend spent (and there is no criticism from me if so), and on your deathbed you have a million and a hundred pounds left, like your parents? Your heirs pay 40% of the hundred, which is £40.

So you have paid £70 between you. What is that as a percentage of £1million plus £100, as well as all the money that each generation has spent and gained in interest? Nowhere near 70%, that's for sure.

Someone with a better grasp of numbers could probably explain better if they wanted to.

escaped

I need a good solicitor to explain this to me! Anyone?

A couple of times on this thread we've been told that we won't be the ones paying IHT because we will be dead, but the children will be paying it. I thought the tax is paid from the estate in the first instance, so it will actually be the benefactor paying it before the recipients get it after all?

As far as I know, the executor of the will is the person who must pay HMRC the inheritance tax.

The tax is paid from the deceased ‘s estate and must be paid first before the remainder of the estate is distributed among the beneficiaries.

When my husband’s cousin died without a will, the biggest beneficiary is HMRC (a six figure sum), then the solicitor and finally the actual beneficiaries (the 1st cousins)

The estate took so long to settle that the executor also had to pay capital gains tax on the property as well.

So yes, the executor is paying all the tax on behalf on the benefactor.

escaped - please don't assume that the 'you' in my previous post was addressed to you in particular. I meant anyone who pays IHT, generically.

A solicitor cannot give a generalized answer because it depends on the terms of the will and the exemptions, assets and liabilities of the deceased

Thanks for trying to unpuzzle my puzzled mind. It was something I read in the Financial Times which said that, along with Denmark, the UK is the only European country which imposes estate taxes on deceased donors, not on the beneficiaries. I assume it's all to do with how legal procedures are implemented.
No worries, @Doodledog. My brain was playing with the idea that 30% in 1980, plus 40% in say 2030, if I live that long, would mean being clobbered for 70% in 50 years! Though it's not that simple as you rightly say.
I think most people would like to be in control of their own money, both when alive and when dead if you get what I mean. Probably not.

Funnily enough, my children (who might be in line to benefit one day) agree with me. They're perfectly capable of earning their own money.

They can always disclaim a legacy, or donate it all to charity. You are not obliged to accept the money, goods or chattels.

www.estplan.co.uk/decline-a-legacy

Hope that helps.

Allira

^Funnily enough, my children (who might be in line to benefit one day) agree with me. They're perfectly capable of earning their own money.^

They can always disclaim a legacy, or donate it all to charity. You are not obliged to accept the money, goods or chattels.

www.estplan.co.uk/decline-a-legacy

Hope that helps.

They know that. As life has turned out, my children are in line to four quite substantial legacies (nothing from me, I'm afraid). One of them might be subject to IHT, which they have no objection paying. I wouldn't say it's a frequent topic of conversation (well, it is fairly morbid), but I do know they've discussed between them the possibility of setting up some kind of charitable foundation (probably community or housing related). The sources of the money are delighted with the idea. Neither of them needs or wants the money for themselves because they already have the satisfaction of having made their own way in life.

You're correct Doodledog. Somebody (or multiple people) inheriting £1,000,001 would pay 40p IHT. Quite honestly, there are few people who inherit £1,000,000 and if they haven't got the wit to work out how to make a comfortable life with that amount, they don't deserve it.