Good points redlandred but surely downsizing is a lifestyle choice,, as in you free up more cash to spend on your children while your alive? Weddings, start on the housing ladder etc..
When it comes to those sort of decisions you tend to think of your kids more than the taxman
Never seems right to tax income that's already been taxed, no matter the wealth of the taxpayer.
This happens anyway, all the time .. VAT, petrol, council, alcohol, tobacco taxes etc. etc. are all paid from income on which income tax and (probably) national insurance contributions have been paid. The thing with taxing houses is that the inflation in house prices is out of control. Many houses in 'up and coming' areas, bought by an average family on average incomes in the (say) 1950/60s are now potentially worth hundreds of thousands of pounds. It would be grossly unfair to tax middle and working class people on their inherited real estate when the aristocracy and the VERY wealthy are able to write trusts and tax evasion wills, thereby saving the necessity to pay tax on houses and 'stately piles' surrounded by acres of land worth many millions
The Aristocracy own very little real estate anymore. Most of them have been forced to sell their estates, mainly due to Inheritance Tax.
Since the turn of the century, 97,500 properties covering 490k acres have been acquired by companies in tax havens like BVI - indeed our old friend and once possible suitor, Swedish billionaire Stefan Persson purchased the 10,000 acre Ramsbury Estate in Wiltshire via a Luxembourg Company.
He certainly doesn't have to worry about any future Inheritance Taxes.
OK, perhaps very little wasn't the right phrase , however you should read some of those articles all of the way through! "Yet all are dwarfed by the incredible reach of corporate land-ownership, which barely existed 100 years ago.
As the biggest 19th-century landowners such as the Church have been sidelined by economic and social changes, their land has been snapped up by the state, charities and the private sector.
More than 2.5million acres – 4 per cent of the country – is in the hands of the Government-run Forestry Commission, which the Coalition plans to privatise. Second on the list is the fast-expanding National Trust, with 630,000 acres. PS Three other big landowners you might not expect ...
PENSION FUNDS: 550,000 acres - Many of the UK's 2,800-plus funds have invested in land for centuries and snapped up struggling farms in the 1980s
THE RSPB: 321, 237 acres - The Royal Society for the Protection of Birds owns 200 reserves and its landholding has rocketed in the past ten years.
DEFENCE ESTATES: 592,000 acres - Over two-thirds of land owned by the MoD's property arm is used for training. It also owns 50,000 service personnel homes, and 800 listed buildings
Catching up swiftly are foreign investors and even supermarkets. Waitrose owns a 4,000-acre estate in Hampshire, which it runs as a farm, while Tesco’s 2,545 stores alone take up 770 acres".
Is this pledge to reduce the amount of income tax on estates worth £1m the same that the Conservative party had in their manifesto prior to the general election?
I quite like inheritance tax. If the government didn't tax inheritance then they would have to make up the shortfall elsewhere, most likely from green taxes or an increase of income tax. Instead, they tax you after you die, which is great because it doesn't matter what you think; you're dead
Not a tax I'm ever likely to have to pay, so I'll leave others to enjoy paying theirs.
Assuming that you are single, anyone owning a home in the s/east is likely to pay IHT upon their death. The "tax-free" allowance (first part of your estate) is just £325,000. On looking at rightmove there are currently only 3 properties for sale in Bexley for under £300k. Anyone living in that particular CAFC catchment area who is currently single, owning their own property and in their 70's or 80's probably has an estate in excess of £500k when adding in other assets such as ISA's, pensions, National savings etc.
Slightly different if you are married as you both have the £325k allowance to use, this having a joint £650k allowance. and so covers a lot of people in Se area. I imagine this is what the Government will raise, thus everyone having a single allowance of £500k.
However, IHT is a very easy tax to avoid. Splitting the home to "tenants in common" being one - or even more simple - take out an insurance policy to pay any IHT that may be due. A whole-of-life insurance policy on a single person aged 70 will costs approx. £1500 pa
Good points redlandred but surely downsizing is a lifestyle choice,, as in you free up more cash to spend on your children while your alive? Weddings, start on the housing ladder etc..
When it comes to those sort of decisions you tend to think of your kids more than the taxman
Well it's a balance. Taxman = society. I'm happy to pay my share. My kids would still do fine under the current set up, and if someone wants me to keep more back for them a better solution would be to meet more care costs rather than leave us to that lottery. That's going to have a much bigger impact (@a grand a week) on what the kids get, and if I'm spared that kind of expense when I'm old and doddery I'd feel happy to let the state have its share.
PS: in the context of a housing squeeze, downsizing is more than a lifestyle choice. Older people rattling around houses way too big for them will not help my kids if/when they have growing families of their own
It's another good policy from the Conservative government
For the vast majority of people like myself it gives comfort in the fact you are looking after your family and the taxman only taxes after £1m, what's not to like other than an excuse to bash those nasty Tories ...
There are plenty of things to not like.. I certainly would rather my kids (and others like them) were looked after now, when they really need it, rather than having to wait until they are 50 or 60. Skewing they system towards big houses encourages people - me - to sit in big houses right up to the day they die (because if I flog my house and downsize, my cash pile does get taxed).
You should consider equity release. This way you & your "kids" can benefit now.
Just to get this straight should I grease my Dads bannisters straight after the budget or is this change going to take a while to kick in? #firstworldproblems
The theory behind inheritance tax is that it stops people amassing wealth and passing it on to generation after generation. It gets at least some of that money back in to circulation. Can understand why some people say they find it abhorrent but it's not really about taxing dead people.
It's another good policy from the Conservative government
For the vast majority of people like myself it gives comfort in the fact you are looking after your family and the taxman only taxes after £1m, what's not to like other than an excuse to bash those nasty Tories ...
There are plenty of things to not like.. I certainly would rather my kids (and others like them) were looked after now, when they really need it, rather than having to wait until they are 50 or 60. Skewing they system towards big houses encourages people - me - to sit in big houses right up to the day they die (because if I flog my house and downsize, my cash pile does get taxed).
Not quite right as you can sell your main residence at any time without capital gains tax, move down market (if that's what you want to do) then gift your children the funds you want them to have.
If you live for 7 years no inheritance tax for them to pay,I believe, or on a sliding scale for deaths between Year 1 and 7. Additionaly you can insure against your death to protect them from paying any inheritance tax if you die within the 7 years.
The theory behind inheritance tax is that it stops people amassing wealth and passing it on to generation after generation. It gets at least some of that money back in to circulation. Can understand why some people say they find it abhorrent but it's not really about taxing dead people.
It was designed to create a philanthropy culture in the UK that exists in the U.S. Meaning everyone would have to work their way up from the bottom no matter where they've come from. However this never happened. Now the generation who benefited from Thatcherism are dying off and the generations after that need their dead parents money to be able to have security in later life. Wouldn't you want your money going to who you want it to rather than to the government who could, and probably regularly squander it on Whitehall workers etc.
It's another good policy from the Conservative government
For the vast majority of people like myself it gives comfort in the fact you are looking after your family and the taxman only taxes after £1m, what's not to like other than an excuse to bash those nasty Tories ...
There are plenty of things to not like.. I certainly would rather my kids (and others like them) were looked after now, when they really need it, rather than having to wait until they are 50 or 60. Skewing they system towards big houses encourages people - me - to sit in big houses right up to the day they die (because if I flog my house and downsize, my cash pile does get taxed).
Not quite right as you can sell your main residence at any time without capital gains tax, move down market (if that's what you want to do) then gift your children the funds you want them to have.
If you live for 7 years no inheritance tax for them to pay,I believe, or on a sliding scale for deaths between Year 1 and 7. Additionaly you can insure against your death to protect them from paying any inheritance tax if you die within the 7 years.
Quite right. But what he meant, was if he downsizes and has a large pot of cash, the interest, will get taxed at 20%.
If he gifts the cash, to his children, they will pay the 20% tax on interest.
Unless, they are non taxpayers and obviously they can use ISA allowances etc.
Inheritance tax is unfair, and I don't personally care if the person owns £500 worth of assets or £500 billion. It leaves a bad taste in the mouth to tax death, but it plays so nicely into ideas of politics of envy.
Tax me when I'm alive, don't tax me and more importantly my family when I'm dead.
You took the words right out of my mouth!
I can imagine the Goverment saying 'Sorry to hear about your loss, now pay us the Inheritance tax'
The theory behind inheritance tax is that it stops people amassing wealth and passing it on to generation after generation. It gets at least some of that money back in to circulation. Can understand why some people say they find it abhorrent but it's not really about taxing dead people.
It was designed to create a philanthropy culture in the UK that exists in the U.S. Meaning everyone would have to work their way up from the bottom no matter where they've come from. However this never happened. Now the generation who benefited from Thatcherism are dying off and the generations after that need their dead parents money to be able to have security in later life. Wouldn't you want your money going to who you want it to rather than to the government who could, and probably regularly squander it on Whitehall workers etc.
To be fair, that last sentence can be applied to all taxes. IHT is a particular form of taxation based on principles of re-distribution of wealth. I can't help thinking that there is a level at which families have more than enough to get by and a little redistribution is not harmful. Where I live £325k would cover the vast majority of family homes and in fact would buy three children a starter home and a car. Anyway most will get £325k times two. So here, a £million exempt amount is only about the very well off.
I'd be interested to know what the split is, I know there has been a far amount of work published suggesting the super rich pay more than people think, and the lowest 10% who pay more as a percentage of their income than people expect. Inheritance tax is avoidable if parcel it out 7 years beforehand.
Anyway it would be interesting to see figures on the below:(complicated by being household income)
Super wealthy well in excess of 150k
110-150k
Those pay 40% on at least some of their income
taxed at lowest rate
taxed at lower rate, but supplemented by tax credits, social housing
Inheritance tax is unfair, and I don't personally care if the person owns £500 worth of assets or £500 billion. It leaves a bad taste in the mouth to tax death, but it plays so nicely into ideas of politics of envy.
Tax me when I'm alive, don't tax me and more importantly my family when I'm dead.
You took the words right out of my mouth!
I can imagine the Goverment saying 'Sorry to hear about your loss, now pay us the Inheritance tax'
But the problem is that those with assets of £500 billion are not paying anywhere near the tax they should be while they are alive, are they? Tax them when they are dead - they are happy enough for others to pay for all the community assets they enjoy while they are kicking around, let them all campaign to pay more tax when they are alive to save their kids money if they want to - not going to happen is it... The ones making money from industries that are polluting the earth don't even care if their offspring die on a choking planet, why would you think they would care if their kids "only" end up with £30m from a £50m fortune?
I should repeat that I do agree with raising the threshold of inheritance tax, but think that it should be on a sliding scale like income tax. There is also an argument, as hinted at by Bryan_Kinsey, that it should be regionalised according to local conditions.
I don't have an issue with the taxation of un-earned income. And inheritance is the most obvious example of it.
Except it has been earned. IHT is levied against the corpse, not the beneficiary. The beneficiary gets whatever is left after the taxman has finished rooting around the corpse's pockets and sofa cushions.
The evidence points to that IHT disproportionately falls on those who are asset-rich but cash-poor, particularly those who bought a home decades ago that has skyrocketed in value but are otherwise not particularly rich. Whose who I imagine IHT is meant to actually tax are rich enough to pay people to help them take measures so to minimise the exposure of their estate to IHT.
The IHT change is being made so that those who are asset-rich but cash-poor are now no longer being so affected by the tax, and instead tax-relief is being removed from the wealthiest pension-savers whilst they are still earning, which makes perfect sense.
Reportedly going to be reduced for million pound homes.
Anyone really think that is a good policy? Won't do anything for working people in our neck of the woods!
I wonder if this could be a cunning plan. Get people to switch their ISA investments, etc into a main property to reduce their inheritance tax bill. So the tax man will pocket huge gains from stamp duty on the purchase of the new £1mn house (and a smaller amount on the place they moved out of). Total take probably more than the inheritance tax would have brought in, while still looking good to the core tory vote. Sorted. Extra tax income now rather than some random tax take in x years time got to be good.
Keep inflating that bubble...
Good job that the "random tax take" won't be needed "in x years time"
Anyone who advocates this is just a hard nosed leftie who wants to tax everyone who earns over 50p
FFS we all pay far too much tax when we are alive
The problem with lefties is they see someone earning £100k as a rich Tory bastard and someone earning £500m a year as a rich tory bastard when in reality it's the people earning £100k that are putting more than their fair share into the pot to pay for jobless, lazy workshy northern labour arseholes
Never seems right to tax income that's already been taxed, no matter the wealth of the taxpayer.
That would apply to virtually all VAT, stamp duty, insurance tax, airport tax, fuel tax, alcohol duty, council tax . . . in fact, if operated as a principle it would just lead to a big rise in income tax.
Never seems right to tax income that's already been taxed, no matter the wealth of the taxpayer.
That would apply to virtually all VAT, stamp duty, insurance tax, airport tax, fuel tax, alcohol duty, council tax . . . in fact, if operated as a principle it would just lead to a big rise in income tax.
Virtually all of those are transactional taxes, rather than taxes on wealth or income.
I'm sure it used to be called death duties. Inheritance tax sounds so much better.
It's a misnomer though - it is not a tax on inheritance. If an unmarried man dies tomorrow and has an estate equal to £1million in cash once it has all been liquidated, and his solicitor was instructed to burn his entire fortune on his death, the solicitor would still need to take £270,000 from that fortune and pay it to the taxman before he burnt the rest of it. No one has inherited anything. It is a tax on dying. More accurately, it is a tax on dying and not being financially savvy enough to avoid the tax. So it's effectively a tax on people who cannot manage their own finances who managed to die whilst in ownership of a small 2-bedroom house in Bromley, or similar.
Comments
When it comes to those sort of decisions you tend to think of your kids more than the taxman
The thing with taxing houses is that the inflation in house prices is out of control. Many houses in 'up and coming' areas, bought by an average family on average incomes in the (say) 1950/60s are now potentially worth hundreds of thousands of pounds. It would be grossly unfair to tax middle and working class people on their inherited real estate when the aristocracy and the VERY wealthy are able to write trusts and tax evasion wills, thereby saving the necessity to pay tax on houses and 'stately piles' surrounded by acres of land worth many millions
Since the turn of the century, 97,500 properties covering 490k acres have been acquired by companies in tax havens like BVI - indeed our old friend and once possible suitor, Swedish billionaire Stefan Persson purchased the 10,000 acre Ramsbury Estate in Wiltshire via a Luxembourg Company.
He certainly doesn't have to worry about any future Inheritance Taxes.
You need to redo your research @Addickted
"Yet all are dwarfed by the incredible reach of corporate land-ownership, which barely existed 100 years ago.
As the biggest 19th-century landowners such as the Church have been sidelined by economic and social changes, their land has been snapped up by the state, charities and the private sector.
More than 2.5million acres – 4 per cent of the country – is in the hands of the Government-run Forestry Commission, which the Coalition plans to privatise. Second on the list is the fast-expanding National Trust, with 630,000 acres. PS Three other big landowners you might not expect ...
PENSION FUNDS: 550,000 acres - Many of the UK's 2,800-plus funds have invested in land for centuries and snapped up struggling farms in the 1980s
THE RSPB: 321, 237 acres - The Royal Society for the Protection of Birds owns 200 reserves and its landholding has rocketed in the past ten years.
DEFENCE ESTATES: 592,000 acres - Over two-thirds of land owned by the MoD's property arm is used for training. It also owns 50,000 service personnel homes, and 800 listed buildings
Catching up swiftly are foreign investors and even supermarkets. Waitrose owns a 4,000-acre estate in Hampshire, which it runs as a farm, while Tesco’s 2,545 stores alone take up 770 acres".
Slightly different if you are married as you both have the £325k allowance to use, this having a joint £650k allowance. and so covers a lot of people in Se area. I imagine this is what the Government will raise, thus everyone having a single allowance of £500k.
However, IHT is a very easy tax to avoid. Splitting the home to "tenants in common" being one - or even more simple - take out an insurance policy to pay any IHT that may be due. A whole-of-life insurance policy on a single person aged 70 will costs approx. £1500 pa
bit of an non issue if you ask me.
PS: in the context of a housing squeeze, downsizing is more than a lifestyle choice. Older people rattling around houses way too big for them will not help my kids if/when they have growing families of their own
#firstworldproblems
If you live for 7 years no inheritance tax for them to pay,I believe, or on a sliding scale for deaths between Year 1 and 7. Additionaly you can insure against your death to protect them from paying any inheritance tax if you die within the 7 years.
If he gifts the cash, to his children, they will pay the 20% tax on interest.
Unless, they are non taxpayers and obviously they can use ISA allowances etc.
I can imagine the Goverment saying 'Sorry to hear about your loss, now pay us the Inheritance tax'
London of course is quite different.
Anyway it would be interesting to see figures on the below:(complicated by being household income)
Super wealthy well in excess of 150k
110-150k
Those pay 40% on at least some of their income
taxed at lowest rate
taxed at lower rate, but supplemented by tax credits, social housing
no tax at all
I should repeat that I do agree with raising the threshold of inheritance tax, but think that it should be on a sliding scale like income tax. There is also an argument, as hinted at by Bryan_Kinsey, that it should be regionalised according to local conditions.
The evidence points to that IHT disproportionately falls on those who are asset-rich but cash-poor, particularly those who bought a home decades ago that has skyrocketed in value but are otherwise not particularly rich. Whose who I imagine IHT is meant to actually tax are rich enough to pay people to help them take measures so to minimise the exposure of their estate to IHT.
The IHT change is being made so that those who are asset-rich but cash-poor are now no longer being so affected by the tax, and instead tax-relief is being removed from the wealthiest pension-savers whilst they are still earning, which makes perfect sense.
Good job that the "random tax take" won't be needed "in x years time"
FFS we all pay far too much tax when we are alive
The problem with lefties is they see someone earning £100k as a rich Tory bastard and someone earning £500m a year as a rich tory bastard when in reality it's the people earning £100k that are putting more than their fair share into the pot to pay for jobless, lazy workshy northern labour arseholes
I think my rant is over