IHT- how to avoid if you have enough wealth

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.

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!

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?

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…

Message withdrawn at poster's request.

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!

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. !!

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.

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

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

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.

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

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!

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.

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.

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.

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?

Doodledog Another good idea.

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

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% 👍

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.

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?

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

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.

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