IHT- how to avoid if you have enough wealth

Rondoallaturc

Yes, there are plenty loopholes in the IHT set up. I have already maxed out areas where funds can be protected. Since the clear intention of the new government is to promote Muslims in society and disadvantage those of us who have worked and made fiscal contributions all our lives, I now have stopped any giving to charities at all linked with abroad and have settled to enjoying the benefits I receive, such as free prescriptions, bus passes, concessions at concerts. Makes me want to make as many unnecessary bus trips as I can!!! If I get thrown in jail for this remark, my food bill will be on the government. People said in July it was time for a change…sadly they did not have the whit to realise what the implications of the change would be for Keir s “working people”. Meanwhile just watch thousands of illegals coming in each week illegally, multiplied by 5 or 6 when they want to ship in relatives, undoubtedly at taxpayer expense. For how long will they continue to claim that the previous govt left a mysterious black hole? It’s all a bit of a laugh, but not really funny!

Please explain what Muslims have to do with IHT.

Our house, hands off I say. 40 years hard work has been invested in our house.

Rondoallature, not long I think!

What does ‘promote Muslims in society’ mean, please?

I am just waiting to see how long my post survives under the new assaults on free speech. Clock ticking……….

Yes, there are plenty loopholes in the IHT set up. I have already maxed out areas where funds can be protected. Since the clear intention of the new government is to promote Muslims in society and disadvantage those of us who have worked and made fiscal contributions all our lives, I now have stopped any giving to charities at all linked with abroad and have settled to enjoying the benefits I receive, such as free prescriptions, bus passes, concessions at concerts. Makes me want to make as many unnecessary bus trips as I can!!! If I get thrown in jail for this remark, my food bill will be on the government. People said in July it was time for a change…sadly they did not have the whit to realise what the implications of the change would be for Keir s “working people”. Meanwhile just watch thousands of illegals coming in each week illegally, multiplied by 5 or 6 when they want to ship in relatives, undoubtedly at taxpayer expense. For how long will they continue to claim that the previous govt left a mysterious black hole? It’s all a bit of a laugh, but not really funny!

After reading this thread I’m glad I haven’t got enough, as things stand, to pay any IHT.
The argument about housing increasing in value holds no water with me. We are not paid some tax back on the things we buy when they depreciate in value eg cars, so I have no truck with paying tax on value accrued on my modest house.
I am a good citizen already. I don’t need to virtue signal about my citizenship by paying more to our government, whichever party happens to be in power. I taught in schools for many years, mainly in underprivileged areas, helping children to achieve their full potential, a much more useful contribution than paying a bit more tax to governments who have a great propensity to waste taxpayer’s money. I raised three children to be well qualified and independent, who additionally pay a great deal more tax than I ever did due to our decision to put them through (very minor) independent schools from age eleven. Neither son even gets a tax allowance due to their earnings.

Thank you BevSec for your kind comment.

I shall now get on with getting rid of some of our savings on our Golden Wedding trip to the Galapagos. We arrived yesterday in Quito, Equador and are relaxing today at the Marriott hotel in preparation for our final flight tomorrow to the islands. Tonight we will be taken on a guided tour of the city, along with our other fellow travellers. We have already met another British couple who will be cruising with us, although most seem to be American. This seems like a good use of our savings.

Then there is potentially an argument to be made for extending the interest-free period, or expediting the process for sorting things out.

The mismatch between the timings is not an argument for not extending the reach of IHT, as far as I can see.

IHT has to be paid within six months of a persons death, HMRC charges interest after this.

IHT has to be paid before probate is granted as Plunger has posted.

How many people can afford to pay IHT, not the majority of middle earners I bet!

If your estate is worth eg £1.5 million on the death of 2nd individual, your IHT liability is 40% of £500,000 ( £1.5 million minus allowance of £1million if primary residence involved ) This leaves a tax bill of £200,000 that needs to be paid BEFORE probate is granted. Where are the beneficiaries going to find that cash apart from a bank loans if they can get one for that amount. This would be accuring interest until the probate granted. Its a ridiculous system. This is one reason we will be doing whatever is legal to avoid IHT so as not to leave our beneficiaries trying sort out loans etc

Allira

winterwhite

Would the posters who maintain that their savings come from money taxed at source so that IHT is double taxation, prefer higher rates of income tax in the first place on medium to high earners?

Yes, it's more honest.

Even if IHT was like income tax and graduated it would not be so bad.
How do other countries which have no IHT manage without that source of income?

the rules are different in France. We have no children so if, when we die, we were to leave our money to a niece or nephew or a child of friends, their inheritance would suffer 60% tax. W each have an "assurance vie" into which I put some money every month. It is really just a pot that I cannot touch easily in that I cannot just do a bank transfer from it. The idea is to give us a small fund which we can use in "later life". After each other my niece is the sole beneficiary and she will get whatever is in the pot. This is not taxable upon death.

winterwhite

Would the posters who maintain that their savings come from money taxed at source so that IHT is double taxation, prefer higher rates of income tax in the first place on medium to high earners?

That is the idea behind it - that those working are not so highly taxed and those who inherit and didn't earn it the wealth, do pay tax. Seems fair.

Well, all this speculation.

We shall have to wait until Budget Day to see what Rachel Reeves has in mind re IHT.

If she upsets too many people, we shall just have to try and keep surviving until after the next GE then.

winterwhite

Would the posters who maintain that their savings come from money taxed at source so that IHT is double taxation, prefer higher rates of income tax in the first place on medium to high earners?

Yes.

Add a 50% above 125K band.

I've no comprehension why the additional rate is only 45% - quite obvious to me taxes are needed to pay for that which people want government to provide.

We eventually paid over three times as much as the original cost of our first house, because of interest rates.

I think lessons about simple and compound interest should be taught in school with a focus on mortgages.

Arguments about what the government spend our taxes in is not childish.
It’s really important that people feel their hard-earned money is going somewhere where they feel it is needed rather than paying for MP’s dinners, and MP’s clothes.

MPs and PMs benefiting from that would obviously disagree.

Chocolatelovinggran

There seems to be a lot of animosity here towards the new government.
The current state of IHT has been in place for many years under the Conservatives.
Would the people who are keen to tell the Labour Party to .. em.. toddle off have been happy to pay it if the previous regime had been re- elected ?
If not, why are they so aggrieved with the current incumbents?

Not me, I've always thought it was an unfair tax.

At least if DC inherit something from their parents, they might stand some chance of buying a decent home for themselves one day instead of struggling to rent unsatisfactory flats or houses where the tenancy is insecure.

Chocolatelovinggran

There seems to be a lot of animosity here towards the new government.
The current state of IHT has been in place for many years under the Conservatives.
Would the people who are keen to tell the Labour Party to .. em.. toddle off have been happy to pay it if the previous regime had been re- elected ?
If not, why are they so aggrieved with the current incumbents?

I feel the same towards any government - back when or now - IHT shouldn't begin until one dies with total assets in excess of five million.

Tax here and now, raise the personal allowance and add a 50% band.

Chocolatelovinggran I am not a fan of inheritance tax as it stands.

I am 100% against the level being lowered by whoever is in office!

People are frightened of having their privilege diluted, CLG. You could see it starting as soon as it was obvious that Labour would form the next government.

There is a log of dog-whistling on social media, and people fall for slogans (eg Two-tier Keir and no-charmer Starmer). Copying others' cliches shows a woeful lack of originality, but it works like 'on its knees' and 'off a cliff' to say nothing but express discontent.

People who didn't complain about the way the last 14 years has ruined the economy and caused so much distress are now moaning because Starmer hasn't sorted it all out in a couple of months. We don't know what the budget will bring, but people are speculating and complaining anyway.

I repeat that I am not in favour of the removal of the WFP (which I wouldn't get anyway, as I am still waiting for my pension), but nor was I in favour of cuts to benefits when they affected families, the disabled and younger people. I'm not sure that this desire to see more generous benefits applies to everyone who is so vociferous about losing the WFP, though. I fully understand that there are those for whom means-testing will take something they really need (means-testing always does) but on here I think a lot of it is moaning for moaning's sake.

There are posters on GN who pay 40% tax already winterwhite

I posted up thread that I am in favour of a further band of 50% on earnings over £500,000.

I think it’s to easy for successive governments to go after so called middle income earners as opposed to billionaires and large corporations.

There seems to be a lot of animosity here towards the new government.
The current state of IHT has been in place for many years under the Conservatives.
Would the people who are keen to tell the Labour Party to .. em.. toddle off have been happy to pay it if the previous regime had been re- elected ?
If not, why are they so aggrieved with the current incumbents?

winterwhite

Would the posters who maintain that their savings come from money taxed at source so that IHT is double taxation, prefer higher rates of income tax in the first place on medium to high earners?

Yes, it's more honest.

Even if IHT was like income tax and graduated it would not be so bad.
How do other countries which have no IHT manage without that source of income?

Doodledog

No, not the politics of envy - the politics of fairness.

Many others have worked equally hard, done without luxuries such as holidays, cars and latest electronic gadgets, but don't live in the SE, where (as others have agreed) much of the money passed down to the next generation comes from unearned income in house price inflation.

Children who inherit that unearned wealth simply compound the geographical unfairness and will pass it to the next generations in perpetuity. It's not about envy - it's about justice. It is easy to get trapped in an area where house prices are low, as geographical mobility and therefore opportunities for work are limited. The utterly tone-deaf advice that people should 'get on their bikes' is idiotic when many years of paying into a mortgage in one area wouldn't buy a shed in another. There is also the unfairness of having people retiring to cheaper areas having inherited money or having sold a small house whether as BTL or to live mortgage-free, which pushes up prices for locals. I've heard it called FILTH - Failed In London, Try Hastings. I wouldn't use that sort of language personally, but I understand the resentment.

Why do people think there are so many disaffected people in the UK? On one hand there are those with unearned wealth of hundreds of thousands, those who have had the opportunity to earn hundreds of thousands, those with large pensions and maxed out ISAs and full holdings in Premium Bonds, and on the other there are those who use food banks, have to declare birthday presents to have them deducted from Universal Credit, have to work for minimum wage and hand much of it over to landlords and scrape by on what's left. The second group suffers from worse health and lower life-expectancy than the first, too, and when they die there is much less to pass down to their children. If care is needed, a £100k cap will eat up most of the value of a £120k house, but just scrape a bit off the top of the value of one worth £1m.

This is not about working hard - it's about life chances.

We have seen how easy it is for social cohesion to break down. If we want to live in a country that is ruled by consent and have streets that are safe to walk on we have to do something about the unfairness, and IHT is one way to stop it being so ingrained. Those who have had the good fortune to accumulate wealth (via savings, hard work or inheritance) can still pass some of it on - it is a basic human instinct to want to help the next generation - but after a point at least some of it should go back to the public purse.

Once again I agree completely.

GrannyGravy13

Doodledog rather than punishing families who live down south by a totally unfair death tax on their savings and investments (homes or otherwise ) which they have already paid tax on, how about incentivising others and enabling them towards being able to have their own assets?

Ah, what a lovely photo

I'm not remotely interested in punishing anyone. If you read what I said, you'd see that I am simply interested in stopping unfairness becoming generationally entrenched. I have no issue with people having their own assets. I have mentioned on occasion that I oppose means tests, but taxing the next generation on money being given to them is entirely different, IMO. Inherited wealth is not 'their own assets' - it is the assets of their parents (and possibly grandparents and great-grandparents too).

I haven't inherited anything, although I probably will one day. My mother and MIL are both still alive, and although thankfully they have both lived unusually long lives so have spent a lot of their assets, they expect to leave something behind. If they don't, I will still be fine, as we have both worked and paid for what we have out of our own money. I also hope to leave money to my own children, and believe that most people want to do that, too - it's hard-wired. I am not bitterly eyeing things that I won't get and begrudging anyone anything. I live in a nice house in a market town, and have tried to ensure that although we are not rich by most standards, we are reasonably comfortable financially. I don't want to take anything from anyone else, but I don't begrudge the thought of giving to others either.

I am absolutely in favour of incentivising others. But how do you incentivise someone on minimum wage with a high rent and no realistic prospect of getting a mortgage because prices are bumped up by those who are given money skewing the market? What sort of enabling will help someone living in a council area that has no money as most inhabitants are in council tax band A, or get rebates for being too poor to pay, so services are cut to the bone? How do you persuade them that it is fair that someone in another area has free transport, access to leisure centres, libraries and other services, or to an FE college, nightclasses and so one, and decent jobs that pay well because of more investment?

I can dream 😀