Inheritance tax ...

[blup]

Not sure I agree with you. There is a huge amount of people that don't have £1000 to their name so how many do you think have over £325K in cash and investments? Not many for sure.

Just look at house prices in the south east and other hot spots,. Plenty of property well over £325k, and in many cases over a million. People who worked hard to own their home should be able to pass it on to their kids.

And remember only about 5% of estates pay any IHT.

People are getting wealthier, that number will shoot up. Income tax is a fairer way of sharing the burden

When death duties were a "thing" countless country homes fell in to ruin until they got passed to the National Trust - some get sold on and typically to foreign investors who rarely live here.

A lot more could have been done to save those homes for the nation. But post war income tax was in the 90 per cent plus range, basic rate the 30 per cent plus. That funded public infrastructure like hospitals and social housing. Low tax means low investment.

In the case of the Royals - they can't sell anything and if you look at the Ducky of Cornwall - its sole purpose is to provide for the Heir to the throne AND also it employs a vast number of people and they pay tax and NI etc etc

I'm not knocking the royals, King C pays voluntary income tax.

 

[blup]

You are being disingenuous. Most Joe Bloggs are families with a home and benefit from the £1 million allowance.

I don't oppose the principal of redistribution of wealth through tax, although historically many tax hikes and new forms of tax have been to fund wars. But a single home family should be able to pass that on to their kids

 

[noseall]

People who worked hard to own their home

...are now sitting on a goldmine.

 

[JohnD]

"A small group of the UK’s wealthiest estates were able to shelter £1.8bn of assets from inheritance tax in 2020-21, new data has revealed, reigniting a debate over which types of businesses should receive the lucrative relief.

Some 68 estates, all with business assets worth more than £5mn, collectively benefited from inheritance tax relief on £1.8bn of their assets, a freedom of information request from think-tank Demos found.

Data from HM Revenue & Customs showed that 3,380 estates in 2020-2021 claimed the tax break — known as business relief — on assets worth a total of £3.2bn.

The measure, introduced in 1976, provides up to 100 per cent inheritance tax relief on the transfer of business assets or shares in an unlisted company, and was originally intended to prevent private businesses being broken up on a death.

But a provision that also allows holdings in businesses that are listed on London’s Alternative Investment Market to avoid the tax has seen share portfolios come to dominate claims for the relief, according to Demos.

The group of 68 estates that benefited the most in 2020-21 represented just 2 per cent of all claimants in the year, but accounted for 57 per cent of the assets benefiting from the tax break, the FOI response showed.
Estates with over £2.5mn of business property accounted for 53 per cent of the total relief claimed in the year 2019-20. They accounted for 69 per cent in 2020-21.

“It is quite shocking that over half of the relief goes to 68 estates,” said Dan Goss, senior researcher at Demos who specialises in IHT. “It’s a very small number of the wealthiest benefiting from the vast majority of the relief. Business relief is being used as a way to reduce tax bills for those estates at the very top.”

There have been calls for the measure to be better targeted, and Goss said that the justification for including Aim shares in the relief was unclear."

FT.com

 

[Mottie]

"A small group of the UK’s wealthiest estates were able to shelter £1.8bn of assets from inheritance tax in 2020-21, new data has revealed, reigniting a debate over which types of businesses should receive the lucrative relief.

Some 68 estates, all with business assets worth more than £5mn, collectively benefited from inheritance tax relief on £1.8bn of their assets, a freedom of information request from think-tank Demos found.

Data from HM Revenue & Customs showed that 3,380 estates in 2020-2021 claimed the tax break — known as business relief — on assets worth a total of £3.2bn.

The measure, introduced in 1976, provides up to 100 per cent inheritance tax relief on the transfer of business assets or shares in an unlisted company, and was originally intended to prevent private businesses being broken up on a death.

But a provision that also allows holdings in businesses that are listed on London’s Alternative Investment Market to avoid the tax has seen share portfolios come to dominate claims for the relief, according to Demos.

The group of 68 estates that benefited the most in 2020-21 represented just 2 per cent of all claimants in the year, but accounted for 57 per cent of the assets benefiting from the tax break, the FOI response showed.
Estates with over £2.5mn of business property accounted for 53 per cent of the total relief claimed in the year 2019-20. They accounted for 69 per cent in 2020-21.

“It is quite shocking that over half of the relief goes to 68 estates,” said Dan Goss, senior researcher at Demos who specialises in IHT. “It’s a very small number of the wealthiest benefiting from the vast majority of the relief. Business relief is being used as a way to reduce tax bills for those estates at the very top.”

There have been calls for the measure to be better targeted, and Goss said that the justification for including Aim shares in the relief was unclear."

FT.com

What exactly is your problem with people not wanting to lose a percentage of their assets they have spent time and money accruing? I take it you have no children you would like to pass any of your easily earned assets on to without the government of the day taking a chunk of it?

 

[JonathanM]

The measure, introduced in 1976, provides up to 100 per cent inheritance tax relief on the transfer of business assets or shares in an unlisted company, and was originally intended to prevent private businesses being broken up on a death.

That's interesting. I had a friend whose family have an unlisted company worth just over a billion pounds. I've occasionally wondered how they kept it in the family, to pass to the next generation.

 

[diy_fun_uk]

What exactly is your problem with people not wanting to lose a percentage of their assets they have spent time and money accruing? I take it you have no children you would like to pass any of your easily earned assets on to without the government of the day taking a chunk of it?

I am very confident if I was wealthy I would instruct my money people to ensure I was paying the level of tax I was legally obliged to, whilst ensuring all possible mechanisms were used relating to my money, property and investments to ensure I wasn't paying a penny more.

 

[gas112]

As Johnd does with his tax free ISA`s

 

[Lower]

What exactly is your problem with people not wanting to lose a percentage of their assets they have spent time and money accruing? I take it you have no children you would like to pass any of your easily earned assets on to without the government of the day taking a chunk of it?

If you gift money to your family, it's tax-free as long as you survive for 7 years and then there is the significant risk that you might need the money that you've gifted.

If you choose not to gift and then die, the same money is then liable for inheritance tax.

How is that fair?

You pay tax when you earn money, you pay tax on investment profits, you pay tax on owning property, you pay tax purchasing improvements to that property. Why is then fair that the money you've already paid tax on is then taxed again when you die?

 

[carmanmemoranda]

If you gift money to your family, it's tax-free as long as you survive for 7 years and then there is the significant risk that you might need the money that you've gifted.

If you choose not to gift and then die, the same money is then liable for inheritance tax.

How is that fair?

You pay tax when you earn money, you pay tax on investment profits, you pay tax on owning property, you pay tax purchasing improvements to that property. Why is then fair that the money you've already paid tax on is then taxed again when you die?

It's not the same person paying the tax "again" at death. It's unearned income for somebody.

Not saying it's right, or wrong, but we need taxes. Maybe the limit needs an increase, or a bigger allowance in different areas (controversial).

Any better options for tax income? Every body is already complaining they are paying too much tax on regular income

 

[diy_fun_uk]

OT but related to the topic, you can have two people in the same care home receiving the same care. Person A has been careful with their money over the years, so they're paying £1500 - £2000 a week for the privilege. Person B earned the same over the years but spent it all, so their care is paid for by the taxpayer.

My advice to anyone with a degree of money whether savings, property or investments is to get it spent and/or given to whoever you desire before it gets used for stuff others aren't paying for.

And pleeeeeease, before anyone starts (because I got roasted for this before re care home costs), I'm not sure what it's like in England but up here, people paying/not paying can be allocated a space in the same care home. It's not a case of 5 star luxury if you pay and a hovel if you don't.

 

[Mottie]

OT but related to the topic, you can have two people in the same care home receiving the same care. Person A has been careful with their money over the years, so they're paying £1500 - £2000 a week for the privilege. Person B earned the same over the years but spent it all, so their care is paid for by the taxpayer.

That is exactly what is happening to the MiL. She's paying, some others are not. She's probably got enough for 10 years but if the money runs out and she's still there, I think, or rather hope, that’s when the local authority will take over the payments.

 

[denso13]

Person A has been careful with their money over the years, so they're paying £1500 - £2000 a week for the privilege. Person B earned the same over the years but spent it all, so their care is paid for by the taxpayer.

That's a political decision on what/how the Government spend the tax take on. Some might think that residents in care homes should pay if they can afford it, rather than raising tax or taking it from others to pay for it.

 

[diy_fun_uk]

That's a political decision on what/how the Government spend the tax take on. Some might think that residents in care homes should pay if they can afford it, rather than raising tax or taking it from others to pay for it.

There's a big difference between someone who's never earned much nor saved compared to someone who has, however they elected to 'spend it as they earned it' rather than be financially prudent.

Being financially prudent often means you get shafted when others don't.

 

[Brigadier]

If you gift money to your family, it's tax-free as long as you survive for 7 years and then there is the significant risk that you might need the money that you've gifted.

If you choose not to gift and then die, the same money is then liable for inheritance tax.

How is that fair?

You pay tax when you earn money, you pay tax on investment profits, you pay tax on owning property, you pay tax purchasing improvements to that property. Why is then fair that the money you've already paid tax on is then taxed again when you die?

Taxation is, among other things, a tool with which to encourage / discourage behaviours.
Cigarettes being taxed at c. 80%, while non-tobacco nicotine products are taxed at c. 20%.
As behaviours change, the need for tax as a driver to change that previous behaviour changes and so, the level of taxation might increase or decrease.



If your sole goal is to minimise - legally - your tax obligations, choose wisely how and where you spend your money.