IHT- how to avoid if you have enough wealth

There is nothing wrong with spending your own money. I really dislike the notion of deprivation of assets, where a third party decides whether you ‘needed’ to buy whatever you wanted towards the end of your life, but allows free spending in earlier years. I know that doesn’t apply to IHT - I am talking about the principle.

I do approve of the seven year gifting rule, as seven years is a lot of leeway when it comes to reasonably predicting one’s likely demise; and it makes no sense to encourage deathbed scenes with a priest on one side of the bed and a lawyer on the other disposing of the estate before the taxman can get his hands on it.

Spending always has knock-on effects. There is VAT on most things, and profits to the producers, suppliers and retailers of purchases, which are again taxed. I think people lose sight of the fact that if we all just hoard our money and avoid taxation as per the title of this thread then there will be no goods, services employment or civilisation. Those things depend on there being a cycle of taxation, with every pound being taxed over and over again. That’s not unfair - it’s how capitalism works.

What is unfair is when those with unearned money cling on to it, and those without are taxed on every penny they work for. Spend away - it’s hoarding and squirrelling that is bad for society - which is why we have inheritance tax in the first place.

M0nica

i do not think anyone has suggested that we shouldn't spend our money before we die.

But how we acquired our assets and how much they cost, high interests rates etc is irrelevant. IHT is paid on the value of someone's estate when they die. - and thats it.

I am surprised and shocked that some think that deliberately depriving the government of lawful taxes (spend, spend, spend) is an acceptable thing to do.

This sounds rather like a criticism of people who want to spend their own money before they die!

GrannyGravy13

Doodledog sorry

No worries .

Doodledog sorry

Once again, @ Doodledog, you have misunderstood. I never said my "pittance" to be paid would be "over a million pounds", or I would be a billionaire several times over. I wish!
No, I haven't misunderstood. You meant that because of your estate of over a million your heirs would pay IHT, and were suggesting that the residual amount was a pittance, implying that you would be badly served if the government took 40% of it.

You are welcome to express what you like, and I am entitled to comment.

Grannygravy I didn't say that you had used the term. Goodness! It's like being in court here at times .

pittance [noun] = small amount, small portion

Doodledog for purposes of clarity I have not used the word pittance , nor would I, unless it was in a quoted post

I am fully aware of the range of income and circumstances of the members on GN

Once again, @ Doodledog, you have misunderstood. I never said my "pittance" to be paid would be "over a million pounds", or I would be a billionaire several times over. I wish!

I am not tone deaf, just because I haven't yet engaged in any threads about people struggling with bills and heating. I have listened to their worries, and I feel very strongly that they shouldn't lose their winter fuel allowance.

I had no idea that someone at a more fortunate other end of the scale wasn't welcome to express their opinions on Gransnet.com in a non-crass manner on a thread about IHT as per the title.

Thank you Norah.

Doodledog

*Not tone deaf Doodledog just voicing their opinions on what is to some a punitive tax.*
That's not the tone deaf bit. Calling over a million pounds a pittance is, IMO one deaf when there are so many threads with people worrying about their bills and how they will heat their homes.

Of course there is a huge variation in both income and capital amongst posters on a board like this one, and what represents a fortune to some will be a pittance to others, but it is perfectly possible to express opinions about financial matters without being crass.

Doodledog Of course there is a huge variation in both income and capital amongst posters on a board like this one, and what represents a fortune to some will be a pittance to others, but it is perfectly possible to express opinions about financial matters without being crass. Indeed.

Apart from the divisiveness of talking about IHT in the same time and space as removing WFP or perhaps free prescriptions and bus passes -- these are much needed on low income and not a pittance.

Not tone deaf Doodledog just voicing their opinions on what is to some a punitive tax.
That's not the tone deaf bit. Calling over a million pounds a pittance is, IMO one deaf when there are so many threads with people worrying about their bills and how they will heat their homes.

Of course there is a huge variation in both income and capital amongst posters on a board like this one, and what represents a fortune to some will be a pittance to others, but it is perfectly possible to express opinions about financial matters without being crass.

Norah

Doodledog

Yes, I understand that. What would people see as a reasonable amount then?

£2,000,000 threshold maybe as £5,000,000

-- maybe as much as --

Edit, I need an edit function, please.

Doodledog

Yes, I understand that. What would people see as a reasonable amount then?

£2,000,000 threshold maybe as £5,000,000

i do not think anyone has suggested that we shouldn't spend our money before we die.

But how we acquired our assets and how much they cost, high interests rates etc is irrelevant. IHT is paid on the value of someone's estate when they die. - and thats it.

Doodledog

Yes, I understand that. What would people see as a reasonable amount then?

I think it’s fine as it is now.

Doodledog

Yes, it’s all relative. These things always are. On a board where people are complaining bitterly about losing £200 towards their fuel costs, describing assets of over £1m seems tone-deaf at best though.

I fall into neither category, will lose my WFA (just) and do not have assets of over £1 million but I can still feel very strongly about both issues and can decide what is fair and unfair.

I'm amazed that some think older people should not spend (spend, spend) their own lawfully earned money because they might deprive the Government of tax!

Surely those with sufficient savings to reach the IHT threshold have paid and may well continue to pay taxes in the form of income tax, VAT on purchases, vehicle licensing, Council tax etc and therefore still contribute to public funds and services?

Spending helps to stimulate the economy and keeps people in work.

Doodledog

Yes, it’s all relative. These things always are. On a board where people are complaining bitterly about losing £200 towards their fuel costs, describing assets of over £1m seems tone-deaf at best though.

Not tone deaf Doodledog just voicing their opinions on what is to some a punitive tax.

I totally disagree with this Government’s decision to remove the winter fuel allowance from pensioners at the level they have set.

Setting it at £15,000 would have been a much fairer outcome, as the median annual salary in the U.K. was £34,963 in 2023.

(Annual earnings varied significantly from North £31,200 to London £44,370)

Yes, it’s all relative. These things always are. On a board where people are complaining bitterly about losing £200 towards their fuel costs, describing assets of over £1m seems tone-deaf at best though.

@ Doodledog
I suppose the "pittance" comment was for me probably relative, compared with what I have already paid in various taxes throughout my life.
It will certainly also be far less than what I have paid 15 years each x 3 children in school fees, plus, until last year, a lifetime of private health care. How much has that saved various governments?
No-one can help it if a property in Mayfair drops into their lap. The important thing is to act responsibly with that chunk of unearned income and if possible, to preserve its value.
Maybe one fairer solution would be to allow the inheritance of the deceased’s home up to the average property price in indidvidual postcodes, but taxed as income beyond that? A bit of a minefield though.

Rekarie

paddyann54
^People seem to forget that if they paid a mortgage over 25 years their house cost a lot more than it said on the deed!
Sometimes several times the cost^

Excellent point!

Ours cost us over 3x the purchase price, especially when you think of the soaring interest rate and the removal of MIRAS.

‘Pittance’ wasn’t my word M0nica. It was a direct quote, hence the quotation marks.

paddyann54

People seem to forget that if they paid a mortgage over 25 years their house cost a lot more than it said on the deed!Sometimes several times the cost

Excellent point!

If the current government is so desperate for my pittance, and that of others here, that they wish to raise the IHT to shore up the economy, then they are obviously running a pretty poor show. But I would say that, of course.

The government raises £6 billion a year from IHT, and while some of it is from large estates, most of it comes from the cumulative total of your 'pittance' Doodledog

I would like IHT to be on a sliding basis, starting at 10% and at an estate valued at as little as £100,000. It would then be a much fairer tax.

Yes, I understand that. What would people see as a reasonable amount then?