Surely we must pay more taxes!?

Barleyfields

GrannyGravy13

Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting or the punitive nature of IHT.

IGT has to be paid within a set time, before probate can be completed, which in many circumstances means bereaved families having to take out loans to pay taxes on money before they receive it.

That’s right - or pay a high rate of interest to defer payment until probate is granted and assets realised, probably by selling a house. We all know how long that can take.

While IHT is important topic on an individual level, this confuses the discussion focusing on how wealth distribution impacts the larger economy.

I think that some of those who feel they may lose out if we try to rebalanced some of the inequality, muddle up being well off and being wealthy.

I think wealth implies a breadth of assets and financial security that extends beyond immediate comforts, whereas being well off refers to a solid yet more constrained financial position. Or as was suggested to me today, it's the difference between having to sell your parents home when they die to use the money to provide more security for you and your family and not having to do that but being able to make the choice to keep it or sell and re-invest the money.

GrannyGravy13

Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting or the punitive nature of IHT.

IGT has to be paid within a set time, before probate can be completed, which in many circumstances means bereaved families having to take out loans to pay taxes on money before they receive it.

That’s right - or pay a high rate of interest to defer payment until probate is granted and assets realised, probably by selling a house. We all know how long that can take.

Lots of others that aren’t everyday names, does it matter what happened in the past, in future any wealth transfer should be taxed whether it’s gifts, inheritance, business shares or property

I did mean lower the threshold so that IHT is paid on more estates, the bulk of inherited wealth is estates exempt from IHT

David49

Norah

GrannyGravy13 Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting.

Agreed.

Perhaps unfair council tax could be addressed.

www.economist.com/britain/2024/01/25/britains-council-tax-is-arbitrary-regressive-and-needs-fixing

Council tax does need to be extended so that high value properties pay according to their value

Agreed.

Norah

GrannyGravy13 Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting.

Agreed.

Perhaps unfair council tax could be addressed.

www.economist.com/britain/2024/01/25/britains-council-tax-is-arbitrary-regressive-and-needs-fixing

Council tax does need to be extended so that high value properties pay according to their value

David49

MaizieD

We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer

It isn't only the 'business rich', though. There's a great deal of inherited wealth, too, we still have the 'idle rich'. But a large part of the problem is that the rich don't always invest in anything productive; they make very little contribution to society, to the extent of taking great pains to avoid taxation of their non productive wealth.

The old aristocracy that have still got the estates are very much working businesses these days, the great houses are either in trust or taken over by NT.
I’m not sure just who the idle rich are these days, those retired on fat pensions perhaps, or maybe Dyson or Ratcliffe who did “earn” their wealth.

Who?.

As I pointed out, Dyson and Ratcliffe are exceptions.

GrannyGravy13 Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting.

Agreed.

Perhaps unfair council tax could be addressed.

www.economist.com/britain/2024/01/25/britains-council-tax-is-arbitrary-regressive-and-needs-fixing

Doodledog

I don't think I've read anything suggesting that the reason IHT is unfair is 'just because' others won't get an inheritance.

The reasons given have included societal unfairness, the risk of political extremism, the divisive nature of some having to work whilst others don't, the fact that those who inherit will often hang onto the inheritance rather than circulate it in the economy and more. Far fewer people base political judgements on envy than those who have money seem to think, and unless people on these threads disclose their own circumstances nobody knows what they are.

I think you're right. If nearly everybody has enough for a relatively comfortable lifestyle, without having to worry about paying essential bills and being able to afford a modest holiday and a newer car every so often, they can shrug their shoulders when they see that some people live a luxurious lifestyle without having to lift a finger.

It's not about envy. It's about desperation and wondering why life seems to have dealt so many people with a rubbish hand.

The 20 wealthiest people in the UK are here:

en.wikipedia.org/wiki/Sunday_Times_Rich_List_2024

Jim Ratcliffe and James Dyson stand out because they really did start from nothing. Almost all the rest come from wealthy families who already had successful businesses, which some of them took over, or (like the Duke of Westminster) inherited a vast amount of wealth.

Many of them have made money by buying up businesses and asset-stripping them. Some are investors/financiers. The Rausing Tetrapaks have possibly enhanced our lives, but looking at the rest of the list, very few of them are producing anything which benefits society or enhances our lives. As noted, Dyson is a possible exception. It's just a giant Monopoly game - money changes hands and some get richer, but the number of properties, houses and hotels doesn't increase.

David49

Because so few estates actually pay IHT there is a case for reducing the threshold so that some tax is paid from a lower level may be starting at 20% then increasing on higher amounts.

Surely you meant raising threshold and increasing on higher amounts?

Because so few estates actually pay IHT there is a case for reducing the threshold so that some tax is paid from a lower level may be starting at 20% then increasing on higher amounts.

I don't think I've read anything suggesting that the reason IHT is unfair is 'just because' others won't get an inheritance.

The reasons given have included societal unfairness, the risk of political extremism, the divisive nature of some having to work whilst others don't, the fact that those who inherit will often hang onto the inheritance rather than circulate it in the economy and more. Far fewer people base political judgements on envy than those who have money seem to think, and unless people on these threads disclose their own circumstances nobody knows what they are.

But it isn't punitive, GG13. It's only 40% of what is left after the tax free allowance, which could be up to £1,000,000.

And if, as I believe you've said before, your heirs have also worked for that money then perhaps they should have had more of it while you were still alive?

I'm sorry, but I can't sympathise on this one.

IHT not IGT

Just because some folks will not get an inheritance doesn’t justify stopping others from inheriting or the punitive nature of IHT.

IGT has to be paid within a set time, before probate can be completed, which in many circumstances means bereaved families having to take out loans to pay taxes on money before they receive it.

MaizieD

^We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer^

It isn't only the 'business rich', though. There's a great deal of inherited wealth, too, we still have the 'idle rich'. But a large part of the problem is that the rich don't always invest in anything productive; they make very little contribution to society, to the extent of taking great pains to avoid taxation of their non productive wealth.

The old aristocracy that have still got the estates are very much working businesses these days, the great houses are either in trust or taken over by NT.
I’m not sure just who the idle rich are these days, those retired on fat pensions perhaps, or maybe Dyson or Ratcliffe who did “earn” their wealth.

Who?.

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

But you are ignoring the fact that people's wealth is increasingly likely to have come from inheritance than from the money they have themselves earned. If they inherited more than the threshold, they will have paid IHT. If they earned interest on their capital, they will have paid tax. However, the capital (ie their wealth - assets, if you like) will not have been taxed. That capital can then be passed on to the next generation, who can interest on it without lifting a finger to do anything. Meanwhile, those who are less fortunate have to play catch-up by slogging their guts out to earn their money.

MaizieD

David49

I’m not going to get involved with Pikety theories, successful business take opportunities offered by government. I started in 1970 times were good until 85 or so, the 90s not so good, 2000 to 2008 very good, since then OK.
I’ve been investing to expand the whole time successive governments have done very little, just a string of short term quick fixes neglecting the economy, the result was entirely predictable.

Oh, David.

Pikety isn't a 'theorist'. He's an economist with an interest in wealth and inequality. Nothing at all to do with businesses.

He has analysed data on wealth and taxation in several countries with 'advanced' economies. Some of the data (the French) goes back 300 years! Having analysed the data he can give a clearer picture of wealth distribution and the way it is affected by taxation (or non taxation) and can suggest ways of improving distribution to make it more equitable, if that is what is desired.

I'm not sure David recognises the distinction between micro- and macro- economics.

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

But shrouds don't have pockets Barleyfields. You might have paid all your taxes, but you'll be gone. Your children and charities will have done nothing to earn the money.

Thank you for your answer to my post Doodledog. I agree with the points you have made.

It would be possible to cap the amount that can be gifted tax free

Barleyfields

I have no desire to give to anyone but my family and my chosen charities whatever I have left when I die Doodledog. A cap on what they may receive after the state has taken its cut by way of IHT is not fair - is the amount of IHT already payable not enough? People who have been high earners have paid a great deal of income tax during their lives - must they shell out even more in death through a cap on what they may leave their children? I doubt any government would be so stupid as to try to do that.

I don't know if any government will be brave enough - I don't see it as stupid.

Dead people don't shell out anything. The tax would be on the unearned money being given to the heirs.

I wonder if a cap on the amount people can inherit is fairer than on a cap on the amount people can leave? That way, someone from a large family can inherit the same as an only child and the surplus in both cases go to the exchequer? Maybe that's not fair - I don't know. I haven't really thought it through.

We still have the rich getting richer, 100 yrs ago it was idle rich, now it’s the business rich and they're much cleverer

It isn't only the 'business rich', though. There's a great deal of inherited wealth, too, we still have the 'idle rich'. But a large part of the problem is that the rich don't always invest in anything productive; they make very little contribution to society, to the extent of taking great pains to avoid taxation of their non productive wealth.

I see all of those things as contributing to the drift to the far right we are seeing - people are disenchanted and resentful, and in many ways I don't blame them.

I absolutely agree with you, Dd.