IHT- how to avoid if you have enough wealth

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.

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 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.

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.

Yes, Mollygo, exactly.

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.

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.

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.

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?

Maizie D we are allowed to be hysterical at the thought of the LP Government getting their hands on what should be going to our children! They will waste it up the wall!

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.

eggplant

growstuff

I don't understand what you don't understand. If people aren't heirs to small fortunes, they can do exactly as you suggest (we're in agreement) and earn their own money.

It's the "better to start with" I have an issue with. Nobody should start off better.

But they do, and pretend they don't.

I know. That's the point I've been making all along.

Allira

It might issue it but we had to work to get it.

Not necessarily. Some people don't work to get their hands on money.

My former mother-in-law is one of them. She had her first child when she was 19 and never worked outside the home after that. Her first husband died quite young, but their house had an insurance policy, so the mortgage was paid off. She was a money grabber and found herself a rich second husband and inherited his assets when he died. She's had the benefit of a high income for most of her life without working for it.

My former husband will inherit what remains (after paying IHT!), despite not having worked himself for the last 25 years. I see absolutely no reason why future generations should benefit. 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.

growstuff

I don't understand what you don't understand. If people aren't heirs to small fortunes, they can do exactly as you suggest (we're in agreement) and earn their own money.

It's the "better to start with" I have an issue with. Nobody should start off better.

But they do, and pretend they don't.

Allira

It might issue it but we had to work to get it.

And you think it's fine that some people don't have to work to get it?

It's not as though the govt. is asking for all of it back. Your heirs get to keep at least 60% of the money they haven't earned.

I don't understand what you don't understand. If people aren't heirs to small fortunes, they can do exactly as you suggest (we're in agreement) and earn their own money.

It's the "better to start with" I have an issue with. Nobody should start off better.

It might issue it but we had to work to get it.

Wrong formatting, that should read 'the government issued

GrannyGravy13

Also MaizieD it is my money earned legally, taxes paid along the way at varying rates.

The Government has not earned it, it has benefited from my earnings considerably throughout my life.

The government issued it, GG13. Taxation reclaims some of the money it has issued.

growstuff

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!

It's absolute nonsense to claim that heirs become dependent on the state if they don't receive an inheritance. They can do what the majority of the population does and earn their own money without an inheritance.

I don't understand this. If you are not heir to a small fortune, you crack on and work I think?

People bettering themselves are often better to start with.

Also MaizieD it is my money earned legally, taxes paid along the way at varying rates.

The Government has not earned it, it has benefited from my earnings considerably throughout my life.

MaizieD because they have and continue to contribute towards the success of our family business, which we all benefit from on a daily basis.

I could be open to the idea of a sliding scale of IHT starting at 10% on £1.5 million and then rising by 5% on each million until £5 million and then 40% on everything above.

This to me would be so much better than the current system.

Witzend

It’s news to me that ‘all wealth belongs collectively to the state’!

I think we might be living in an alternative state to some, Witzend.

Why not go after the wealthy tax evaders who hide their money away and evade paying taxes on earned income yet may well benefit from public services?

Thst coul bring in a shilling or two.

GrannyGravy13

MaizieD I can assure you I am no where near hysterical.

I am however vehemently opposed to the level IHT kicks in and the 40% rate that is imposed.

You are definitely wrong with

your heirs have done nothing to earn themselves

The way IHT is collected is punitive, it’s already been posted up thread in detail.

If your heirs have 'earned' the money why do you still have it to 'leave' to them?

It’s news to me that ‘all wealth belongs collectively to the state’!