IHT- how to avoid if you have enough wealth

I agree woleheartedly, if you can avoid it then pay an accountant to sort things out I say.

I can understand people feeling that money they have saved is theirs, and of course it is if they have worked for it. I do believe that people should be able to spend their own money how they like, and object to means-testing taking from some to give to others.

Inherited money, however, it is unearned and therefore should, IMO, be subject to tax. Not to put too fine a point on it, dead people can't own anything, so it is no longer our money when we die, and whether or not we were taxed on it in the first place is pretty much irrelevant. The tax is on the people inheriting, not the ones passing the money on.

Maybe there should be an allowance for inheritance, so someone with five children can leave the same amount to each of them as someone with a similar estate can leave to an only child? As it is, there are so many inbuilt unfairnesses that it's difficult to know where to start. Geographical differences in both investment and growth mean that an accident of birth can give some people huge advantage over others based on where they are born. Means-testing social care takes from some and not others, and caps would protect those with higher-value properties even more.

Clearly, an only child with parents living in the SE and not needing care will inherit far more than someone in a family of 5 in the NW (or any cheaper area) whose parents were unlucky enough to develop Alzheimers and go into homes, and this would be true even if both sets of parents had identical jobs and worked equally hard. Even with a cap on fees of £100k, the first person could easily inherit hundreds of thousands and the second get next to nothing.

We all know life's not fair, and few would argue that policies should be about making everyone the same. But people do need to feel that there is some point in trying. It's when some groups find that life is stacked against them that they get resentful, and when that unfairness is as a result of policies that advantage some over others then IMO we do need our leaders to act. It should be the case that working hard gives people more than not doing so, but that doesn't happen. Too much depends on things that people can't control, and the pretence that the UK operates as a meritocracy adds insult to injury.

Whitewavemark2

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.

A good post - a good citizen!

A good citizen,likes to tell others were their money should go. Are we in the Stalinist state of the UK, heading that way it seems. !!

Disclaimer, I am wholeheartedly in favour of a safety net for those in need, which is why I am 100% opposed to the removal of the WFA for all pensioners, the bar has been set far too low!

Message withdrawn at poster's request.

This is Jeremy Clarkson’s take on Labour’s alleged tax proposals.

I have no problem with paying taxes whilst alive and still do.
Creating an upper tier of tax of 50% on income over £500,000 would be appropriate in my opinion.

The mega rich have broader shoulders than those of middle income and those who have been prudent during their lifetime in order to provide for their AC and GC on their death…

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?

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.

A good post - a good citizen!

Dinahmo

Norah

NotSpaghetti

Do people think that those people with nothing, didn't work hard - the same as anyone else.

Even those with nothing to show for it (maybe especially those) can have worked extremely hard.

There is a lot of smugness around "hard work" it seems.

Just saying.

I agree.

I also can't imagine why it matters one has "not earned" during home ownership. Homes cost much more than purchase price.

Not all homes have skyrocketed.

The last home sold near ours priced considerably South of £200,000 -- we'd have earned more saving at interest or investing in something else.

Re the last para - in that case and yours is similar in price to the one sold then you will likely be outside the scope. Unless you've a few Hockneys on your walls.

I haven't been able to work out why you believe that from what I posted. Yes, if we died tomorrow, we would, with current rates, owe IHT.

In fact, we are far under the £350,000 tax free exemption that could be added for a home. I assume that is unfair for many people. The average home price is south of £290,000. Not everyone lives in London.

More to the point - tax has been paid on everything earned and saved. I'd still prefer income tax rates go up, than IHT on what we have saved.

Primrose53

Care at home is just as expensive. A friend of myMum’s had a live in carer (2 weeks on, two weeks another carer). On top of her wages,she had to feed her and then there were also all the usual running costs of the house.

Most importantly you really have to get on with the carer or it can be unpleasant having a stranger in your home. At least in a care home you have a team of carers.

We looked into live-in care for an aunt of dh, who’d have needed help at night (going to the loo) as well as in the day. TBH it was going to work out even more expensive than a nice care home, which was where she eventually ended up.

I don’t know whether many people still take out annuities to help to cover CH fees. My sister, who had P of A for our mother, did take one out - to me it seemed an awful lot of cash to fork out at the time, but thank goodness she did. My DM’s own income was taken into account, but the annuity guaranteed to cover the rest of the fees until she died.

She was very nearly 89 when she moved to her care home (Alzheimer’s) and went on to just over 97. I had never expected her to last so long - although she came from a long lived family none of them had made it past 90.

Having worked it out, my sister said we ‘broke even’ at roughly the 4 year mark. Of course the annuity provider had wanted her full medical history before making an offer (or calculated bet) on how long she was going to live, so it did take a while.

NotSpaghetti

ronib there are lots of "over 90s" who are doing well though like my mother-in-law.

She has a cleaner once a week, a gardener once a week and us.
She lives alone in a 3 bed house which she moved to at 95 or 96.

She isn't exactly "fit" but she is most definitely still independent!

A good friend of mine 80 had an aunt who died 96 at home, steadfastly refused a care home, the house hadn’t been touched for 50yrs and the garden wasn’t much better. He was only beneficiary ended up with £500k after IHT, he was already wealthy, self made, he died 5 yrs later his (younger) wife had the lot, tax free.

I lost touch, but she was capable of spending prolifically, must update myself on her.

The tax inspectors are only carrying out the laws made by governments.

I agree with Maddyone and GrannyGravy13 although my estate will not be great enough to attract IHT. I want my property to go to someone I have designated and not to the grubby hands of the taxman. Too much of my tax money has been squandered on foreign wars, foreign warlords and groups of which I strongly disapprove.

Care at home is just as expensive. A friend of myMum’s had a live in carer (2 weeks on, two weeks another carer). On top of her wages,she had to feed her and then there were also all the usual running costs of the house.

Most importantly you really have to get on with the carer or it can be unpleasant having a stranger in your home. At least in a care home you have a team of carers.

We are taxed on our earnings and I do not think we should be taxed on any interest we make when we invest those earnings.

I receive a full state pension because I didn't opt out of the full women's stamp in the 1980's and also receive my late husband's private pension but am now being penalised for planning for the future when we were young to ensure we had a decent retirement. Because we did that I now lose out on the Winter Fuel Allowance and any other benefits that are available.

The system only provides for people who never took the initiative to provide for their future and for illegal immigrants who have never contributed to the Great Britains coffers.

We should have spent, spent, spent instead of ensuring we had a decent retirement and let the government pay for everything.

Monica care at home costs can also be significant varying from £25 to £38 per hour. It’s not unheard of to be charged around £700 plus a week for enhanced
care packages at home plus the cost of cleaners, gardener, general repair etc. Heating can be a significant cost too even for apparently wealthy pensioners. So for the elderly in need of support in their own homes, saving pots can disappear very quickly too.

Only one person in 10 ends up in a care home. My father lived until 92 and never came anywhere near needing to go into care. His sister is living at home at 96.

I live opposite a centenarian, still living at home and walking his mile a day.

With the average price of a house at £285,000,( I know this hides immense variations from region to area), average stays in care homes vary from 7 years at 65-70 to 3 years at 90.

If you are unfortunate enough to go into care when relatively young, it can eat up that money, but for many people with shorter stays, especially after you deduct basic pension and AA, which amounts to roughly, £14,000-14500 a year from the annual cost - and for those with occupational pensions, they may contribute a significant amount of the weekly cost.. There should be a reasonable amount of the estate left to distribute to legatees.

This is not denying that for some families, care costs can wipe out any inheritance, and that many are dependent on the state paying for care, but these things should be seen in proportion. Many people do not go into care and many are not there long enough to make huge inroads into their assets, in whatever form they take.

ronib there are lots of "over 90s" who are doing well though like my mother-in-law.

She has a cleaner once a week, a gardener once a week and us.
She lives alone in a 3 bed house which she moved to at 95 or 96.

She isn't exactly "fit" but she is most definitely still independent!

Not everyone will need to go into a care home.

The fees can be exorbitant and quickly use up any savings including those from the sale of the family home.
What then?

I am surprised that anyone over 90 years in the Uk will have any inheritance left to tax. Care homes and full time care at home are expensive. Using up savings and then equity release will mean there’s less to pay on inheritance tax.

What is the hang up with peoples houses?

I am more concerned about savings accrued over a lifetime along with pension funds. Consecutive governments have encouraged us to save for our retirement and care needs. If we die before needing to pay for care, I see absolutely no reason why the a government should have my money.

Perhaps we should have spent it all on frivolities and rely on the state, as opposed to being prudent and wishing to take care of ourselves and our families?

Not everyone who reaches IHT levels has earned what they have. I am not talking just about the extra value in their own houses but many of us who hve lost our parents over the last 20 plus years, where they owned their own house have benefitted from inheriting money from the sale of our parents' house.

When my father died, the value of his home meant we paid IHT on his estate, as well as inheriting a significant sum, which has contributed to putting our estate in the IHT zone.

Of the 4% of estates that pay IHT the majority would be marginal payments, those with a lot of assets have either gifted or sold much of their wealth over the years, if they have sold them CGT would have been paid.

Apart from benefits and health a lot of money has got to be spent on climate change and water management, I’m not sure the measures being discussed so far are enough. Voters want all these improvements but don’t realize how costly they are.

I also can't imagine why it matters one has "not earned" during home ownership. Homes cost much more than purchase price.
True, but it’s those who don’t want to pay tax who go on about how they worked hard to pay for their homes, when on the whole they have just lived in them and made them as pleasant as possible whilst they did so. If a house is worth over a million the chances are that it wasn’t bought and paid for with a mortgage of that amount. It will have been bought with an inherited deposit or bought much more cheaply and increased in value over time. Nobody is suggesting taking that away - just taxing the percentage that is over the allowance, which is applicable to something like 4% of the population.

Notspaghetti "I feel, like M0nica, that those that have to pay it are actually the lucky ones.
Same for higher rate income tax and so on..."

I remember back in the mid 70s I took on a client who was a designer. Her (male) partner persuaded her to appoint an accountant who had a Rolls Royce. He charged them several hundred pounds for a VAT registration. She was gobsmacked at this because they just didn't need an accountant at that sort of level. So they came to me.

Whenever a client moaned about paying tax I always told them that they were lucky to be making sufficient profit to have to do so.