IHT- how to avoid if you have enough wealth

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?

Enjoy 💷💷💷💷

GrannyGravy13

Oops sorry Allira just realised you were referring to a Premium Bond win. I hazard a guess that any monetary gifts will be subject to the current gift/tax laws

Oh dear, might have to spend it all then!

Oops sorry Allira just realised you were referring to a Premium Bond win. I hazard a guess that any monetary gifts will be subject to the current gift/tax laws

Allira if you have a signed note that the family is in a lottery syndicate no tax is payable 😜

M0nica

Our estate will be liable to IHT and beyond giving children odd sums at various times, we are doing nothing to avoid it.

We have both had fortunate lives, passed our eleven plus, went to university with maintenance grants, had good careers and confortable retirements. All in a country where the rule of law prevails. We are quite willing for IHT to be paid on our estates after our deat. We received so much, we are happy to give back.

Like you I expect to pay IHT due to owning a house in the South East. I hope to reduce my liability by downsizing and moving nearer to my family further North. Once I've released some capital I will give some away and spend some in the hope that my family will keep most of what is left, but like you I'm grateful that I received a university education at relatively low cost. I don't currently have a comfortable retirement but should have after downsizing. Currently I'm on a low income, still paying a mortgage and unable to properly maintain a house that is too big and 100 years old so needing repairs! I just hope I can find a buyer without having to take too big a hit.

GrannyGravy13

You do not have to give your already taxed assets and money back to the Government on your death to be a good citizen Whitewavemark2

Many people are involved in charitable work and donate all of their lives (DH & I included), and no doubt many on GN.

Have any posters got ISA’s which is a Government allowed form of tax avoidance on gains as are Premium Bonds?

If I win £1 million on Sunday and decide to give some away to my family, will those gifts be subject to IHT or, if the win was tax-free, will they be exempt?

It is a quandary I do worry about as every month I expect to win £1m but so far no luck.

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?

Nellgwynne, love your comment, absolutely agree LP can foxtrot oscar !

Maddyone, .I love your post and agree with absolutely everything you have said.

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.

HMRC seem to be making lots of mistakes well worth keeping an eye on your finances

Calendargirl

GrannyGravy13

Every single penny I have has been taxed, I see absolutely no reason why it should be taxed again on my death.

Very true.

Completely agree! As has been said, many of us have suffered hard times, worked hard, done without luxuries such as holidays, cars, latest electronic gadgets and have eventually made a good life for ourselves and have savings and a home. Why should all that hard work now prevent us from passing on an inheritance to our children because Labour want to snatch it from us via IHT - politics of envy?

The IHT is paid by the beneficiaries, not us. The way I think of it is my DC who will inherit, should pay tax on it as it's unearned income for them. It's mostly the value of the house that's risen anyway.

nellgwynne

It's not just for the 'very wealthy'. If you live in a nice part of the South East, your house value will easily take you into IHT. We've paid masses of income tax, capital gains tax, and a hefty chunk of Stamp duty when we last moved. The Labour govt can foxtrot Oscar as far as I'm concerned.

Not quite how I would have put it.

But I agree with you 100% 👍

Good for you. I’m thinking your children will have learned more from you than the value of any extra inheritance

Doodledog Another good idea.

Martin Lewis says that Premium Bonds are not a good bet interest-wise, as unless you have extraordinary luck you would get more in a savings account. The government benefit from people using them as a savings/gambling hybrid, as investors are effectively lending them the money.

Maybe ISAs should be limited in the total people can have in them, rather than the amount that can be saved in a tax year? They were intended as a way to encourage small savers, but many people put away £20k a year and have hundreds of thousands in them tax free. Maybe a maximum of £100k at any given time would be better?

It's not just for the 'very wealthy'. If you live in a nice part of the South East, your house value will easily take you into IHT. We've paid masses of income tax, capital gains tax, and a hefty chunk of Stamp duty when we last moved. The Labour govt can foxtrot Oscar as far as I'm concerned.

Doodledog An excellent post. Thank you.

As an accountant and tax adviser I do feel obliged to make the occasional comment to people. I remember suggesting to one client who was reasonably well off that he might like to pass some down to his adult children. His answer was no. He'd helped to buying their houses and that was it as far as IHT went.

We will do nothing to avoid Inheritance Tax, although I think we would be borderline anyway. Our children have been very successful in their lives, planning to retire in their mid 50s, and they also seem to have been quite good at legal tax avoidance too, of which we don't really approve. So we are happy to pay IHT and hope this govt closes down current tax avoidance methods.

After reading this thread I am glad that I have nothing to leave my son! Having to take Medical Retirement late 40’s plus marriage breakup meant I had no chance to save. Had to sell our house & move to rented property. Had a very bad few years but got through it regretting being unable to have my own property again & save! So my son & family will not have this problem. Do feel sad when a couple of friends talk of how much they will be able to leave to their children but also think of how much will their children actually get by the time tax is taken yet again? It is one thing I do not have to worry about so long as I have enough insurance to pay for my funeral!

I agree as well but what bugs me is that the more people have the less they want to pay tax. Avoidance may be legal but it's just as immoral as evasion

GrannyGravy13

You do not have to give your already taxed assets and money back to the Government on your death to be a good citizen Whitewavemark2

Many people are involved in charitable work and donate all of their lives (DH & I included), and no doubt many on GN.

Have any posters got ISA’s which is a Government allowed form of tax avoidance on gains as are Premium Bonds?

There is a difference with premium bonds. Not everyone wins. With ISAs everyone will get some sort of income or gains.

With whom are you agreeing, mabon? It's not clear from your post.