Inheritance tax

The threshold is £325,000 and any amount above that is taxed at 40%. The threshold seems too low to me. I come from a working class background and wouldn’t inherit enough to be taxed so it doesn’t affect me personally. However I think if somebody has earned their money by working hard and has chosen to save a lot rather than buy lots of expensive things, they should be allowed to leave that money to who they want.

Obviously some people inherit extremely large amounts of money and the morally right thing to do would be to give some to those in need. I just think the threshold should be higher as £325,000+ could be attained through hard work alone and choosing to save rather than buying expensive things and travelling lots. Or perhaps it would be best to have increasing tax bands?

I’m not sure I’m not very well educated on this issue, it wasn’t that long ago I found out inheritance tax exists. Just want to know peoples thoughts on it.. :smile:

i totally agree.

I think you’re being ridiculous. I’d prefer if the wealth was completely seized but taxing it at 40% at a threshold of £325,000 is incredibly lenient. And no wealth is attained through hard work alone . It’s often the opposite

Reply 3

username1799249

19

Of all the taxes, it is pretty easy to avoid with a bit of forward planning. But like most taxes, those with wealth and the ability to seek expensive advice pay less than those who just plod life.

Reply 4

errrr99

16

Original post by Emiluu

Or perhaps it would be best to have increasing tax bands?

I’m not sure I’m not very well educated on this issue, it wasn’t that long ago I found out inheritance tax exists. Just want to know peoples thoughts on it.. :smile:

remember the £325k is for one person (i.e. a single/divorced person) as opposed to a couple, and it applies to any asset i.e. cash/land/2ndhome/whatever...whereas in 2015 it was declared that it would be lifted to £500k per person from April 2020 onwards as long as the asset in question is the main residence, and the beneficiaries are the children of the person in question.

in terms of comparisons around the world of IHT policy, few countries have 40% IHT. Switzerland is generally below 8ish% (depends on city of residence) as long as the beneficiary is the children of the deceased, even the USA in most states the tax rate is similar or more favourable than 10% tax rate as long as the estate stays in the bloodline. Australia and Canada do not have IHT as far as I can remember. It is widely (globally) considered an immoral tax as it is double taxation. Probably the UK/Japan have the highest rates.

(edited 4 years ago)

Reply 5

Em.-.

OP

18

Original post by errrr99

remember the £325k is for one person (i.e. a single/divorced person) as opposed to a couple, and it applies to any asset i.e. cash/land/2ndhome/whatever...whereas in 2015 it was declared that it would be lifted to £500k per person from April 2020 onwards as long as the asset in question is the main residence, and the beneficiaries are the children of the person in question.

in terms of comparisons around the world of IHT policy, few countries have 40% IHT. Switzerland is generally below 8ish% (depends on city of residence) as long as the beneficiary is the children of the deceased, even the USA in most states the tax rate is similar or more favourable than 10% tax rate as long as the estate stays in the bloodline. Australia and Canada do not have IHT as far as I can remember. It is widely (globally) considered an immoral tax as it is double taxation. Probably the UK/Japan have the highest rates.

Thanks for explaining. I knew Australia didn’t have it but didn’t realise the UK was so extreme compared to others. Interesting that it globally tends to be considered an immoral tax, though I can understand why.

Reply 6

RogerOxon

21

Original post by Emiluu

The threshold is £325,000 and any amount above that is taxed at 40%. The threshold seems too low to me. I come from a working class background and wouldn’t inherit enough to be taxed so it doesn’t affect me personally. However I think if somebody has earned their money by working hard and has chosen to save a lot rather than buy lots of expensive things, they should be allowed to leave that money to who they want.

Obviously some people inherit extremely large amounts of money and the morally right thing to do would be to give some to those in need. I just think the threshold should be higher as £325,000+ could be attained through hard work alone and choosing to save rather than buying expensive things and travelling lots. Or perhaps it would be best to have increasing tax bands?

I’m not sure I’m not very well educated on this issue, it wasn’t that long ago I found out inheritance tax exists. Just want to know peoples thoughts on it.. :smile:

There is an additional allowance for the family home. It's also possible to make PETs (Potentially Exempt Transfers) in your later years, although it's a bit nasty not knowing if tax is going to be due or not.

In the US, federal estate tax doesn't kick-in until $11.4m.

I'd prefer no inheritance tax, or a much higher threshold. We do need to ensure equal opportunities though.

Reply 7

RogerOxon

21

Original post by errrr99

remember the £325k is for one person (i.e. a single/divorced person) as opposed to a couple
Which doesn't help that much unless the first to die has enough to leave assets to the children, rather than their spouse. It's difficult to leave a share of the family home if the surviving spouse continues to live there, as they gain a benefit form it.

I don't like the additional allowance for the family home, as it encourages single people to live in houses far bigger than they need.

Reply 8

londonmyst

19

I disagree with both the current uk threshold and taxation rate levels.
The latter is far too high, the former far too low.

Taxing people during their lifetimes is a necessary inconvenience/evil, depending on perspective.
But taxing the personal estates of deceased persons is in a totally different league.
Adults should be able to freely gift their cash, property, shares, organs and anything else belonging to them to a person/persons/pet/organisation of their own choosing- without worrying about their estates/executors being hammered by inheritance tax demands.
Yes, some savvy people do employ trust funds, creative estate planning and tax avoidance strategies to minimise anticipated inheritance tax liability.
Even the Sheriff of Nottingham and Robin Hood didn't stoop as low as attempting to rob the dead by means of levying exorbitant tax demands.

Reply 9

errrr99

16

Original post by RogerOxon

Which doesn't help that much unless the first to die has enough to leave assets to the children, rather than their spouse. It's difficult to leave a share of the family home if the surviving spouse continues to live there, as they gain a benefit form it.

there are strong policy reasons why the surviving spouse on default (intestate) inherits the home on the death of their spouse...no-one wants children to take priority and turf the elderly onto the street just to receive an inheritance

if the dead spouse left a will to dis-inherit the surviving spouse, that could be challenged in the courts

Reply 10

Good bloke

19

Original post by cadaanshaydaan

I’d prefer if the wealth was completely seized

So you advocate the state confiscating everything we all own when we die? Have you thought that through at all? Or even a little bit?

Reply 11

Good bloke

19

Original post by RogerOxon

I don't like the additional allowance for the family home, as it encourages single people to live in houses far bigger than they need.

No, because the allowance applies to any cash held as a result of selling the home, or to assets acquired using cash which was sourced from a home sale.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

Reply 12

harrysbar

21

Original post by ByEeek

Of all the taxes, it is pretty easy to avoid with a bit of forward planning. But like most taxes, those with wealth and the ability to seek expensive advice pay less than those who just plod life.

It's not easy to avoid, I've tried :colondollar:

My dad even gifted his flat to my sister and I about 10 years ago so that we legally own it not him, all in the hope of us not being heavily taxed on it when we sell the property after his death. But guess what, even after taking advice from a tax lawyer - we will be

Reply 13

tashkent46

20

Don't think it should be abolished and don't agree with a huge increase. People have a right to what they have earned and to pass that on to their families but we've all got to pay for services and this is one way to do it, taking a small amount from someone who can afford to lose to give it to someone who cannot is the right way in my opinion.

Reply 14

Pulkitmal2001

14

I mean I think the middle class get hit the most by IHT — the multi millionaires (talking £5m+) can probably employ expensive wealth management companies to minimise taxes etc. If your total net worth at death is £500k, £175k is taxed at 40%, meaning the total inheritance is £405k — £95,000 paid in taxes!! I don’t know how a middle class individual who went to university, worked hard to provide a good life for their family and paid higher taxes when they were living should have to lose out on 95k when they die, simply because they worked a bit harder than the average person 😒

Reply 15

tashkent46

20

Original post by Pulkitmal2001

I mean I think the middle class get hit the most by IHT — the multi millionaires (talking £5m+) can probably employ expensive wealth management companies to minimise taxes etc. If your total net worth at death is £500k, £175k is taxed at 40%, meaning the total inheritance is £405k — £95,000 paid in taxes!! I don’t know how a middle class individual who went to university, worked hard to provide a good life for their family and paid higher taxes when they were living should have to lose out on 95k when they die, simply because they worked a bit harder than the average person 😒

I would like to say two things.

Firstly, an inheritance tax does not make the person who earned the money 'lose out' because they are dead. The person who loses out is the person who inherits it, who has not earned the money.

Secondly, wealth is not always an indication of hard work. Excluding those who are born into wealth and privilege. Let us deal with people who actually work for their wealth. It seems dishonest to suggest that a miner who does backbreaking labour for a pittance is any less hardworking than a stockbroker who earns 100 times more than him.

Reply 16

harrysbar

21

Original post by tashkent46

Secondly, wealth is not always an indication of hard work. Excluding those who are born into wealth and privilege. Let us deal with people who actually work for their wealth. It seems dishonest to suggest that a miner who does backbreaking labour for a pittance is any less hardworking than a stockbroker who earns 100 times more than him.

true but the stockbroker probably worked harder in maths lessons

Reply 17

RogerOxon

21

Original post by Good bloke

No, because the allowance applies to any cash held as a result of selling the home, or to assets acquired using cash which was sourced from a home sale.

The additional nil-rate band will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants.

https://www.gov.uk/government/publications/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band/inheritance-tax-main-residence-nil-rate-band-and-the-existing-nil-rate-band

I didn't know that. That, effectively, makes it a reduced allowance for people that have never owned a home / one that's expensive enough. Very odd.

Reply 18

Pulkitmal2001

14

Original post by tashkent46

I would like to say two things.

Firstly, an inheritance tax does not make the person who earned the money 'lose out' because they are dead. The person who loses out is the person who inherits it, who has not earned the money.

Secondly, wealth is not always an indication of hard work. Excluding those who are born into wealth and privilege. Let us deal with people who actually work for their wealth. It seems dishonest to suggest that a miner who does backbreaking labour for a pittance is any less hardworking than a stockbroker who earns 100 times more than him.

Well of course that is what I meant (to the first thing). It isn’t always an indication of hard work (agreed) but the middle class tends to be composed of teachers, doctors, lawyers, accountants etc. The people who sacrificed their youth in exchange for better financial health in life. Is it fair to then say that they should be the ones paying higher tax throughout their working life, and then pay 40% of everything they’ve earned and want to leave behind to help their family above a nominal threshold of 325k? Even an average apartment of 2 bedrooms in an average area in London is about 300-400k. Why should the person who gave up their youth and sacrificed hours toiling away to better themselves be forced to pay money to those who didn’t?

One major reason is that the welfare system in the uk is severely flawed. The amount of people taking advantage of it is insane — leaving those genuinely in need of welfare support facing continuous cuts in a world where the price of everything is continuously going up. Frankly, I don’t know where our taxes go — every single public sector has had major cuts over the past decade.

Reply 19

akragas

12

Original post by cadaanshaydaan

I think you’re being ridiculous. I’d prefer if the wealth was completely seized but taxing it at 40% at a threshold of £325,000 is incredibly lenient. And no wealth is attained through hard work alone . It’s often the opposite

Rich people would just move their money abroad and the Government will get nothing. 40% above £325K is still better than £0.

Inheritance tax

Quick Reply

Related discussions

Latest

Trending

Trending

Articles for you