[Politics] Inheritance Tax

[Mancgull]

the threshold is 325k but should an estate be worth 326k you're liable to inheritance tax on the lot so the solicitor dealing with an estate I stand to inherit says

That’s incorrect.

 

[Mancgull]

because if they are passed down once both parents are deceased to children or grandchildren the threshold becomes 650k

Each individual has a nil rate band of £325k and a residence nil rate band of £175k. Therefore if a married couple have a house worth £350k or more, which they pass to a direct descendent, they have total allowances of £1m between them.
Therefore zero tax on anything below £1m and 40% tax above that threshold.
The residence nil rate band is also tapered down by £1 in every £2 that the estate is over £2m in total. So the very wealthy will only get a nil rate band of £325k each.
I would think that the Tories may look at reducing the tax rate from 40% somehow.
I expect it won’t have time for the legislation to be passed before they lose the general election anyway. The legislation on their abolition of the Lifetime Allowance on pensions still hasn’t been finalised.

 

[zefarelly]

Little know fact . . . They don't shout about it, you have to prove it . . . But direct descendants also now includes step chidlren. It didn't until quite recently.

It's nigh on impossible to pick a number, but a sliding scale like income tax seems to make sense . . . . NRB seems about right, maybe start tax at 20% and raise at increments ? the numbers mean nothing to so many but everything to a few, really dependant on location and luck as much as anything.

 

[drew]

if there is one group of people that don't need the money, its dead people. What seems a bit unfair is it's the estate that is taxed, not the recipients, an only child can inherit a large lump tax free, 6 children and grandchildren named in a will could recieve a small amount each that has been taxed to become smaller.
Personally, I would say tax man take the lions share of any estate, if only I trusted the government to spend it wisely. Probably better to take 80% if there is no spouse, and distribute the wealth of the dead evenly among the entire adult population of the UK as a Christmas bonus.

Not seen that before, are you sure that's right?

 

[drew]

But it’s not the beneficiary who is being taxed. It’s the dead person, or rather his/her estate.

I’m not an IHT fan but I don’t really buy the double-taxation argument. As you say, the lion’s share of a typical estate is typically not a savings account but the value of a property which, for most elderly people, has grown hugely over the years, way above inflation, and on which no tax is ever paid.

Dead people do not pay tax. The tax is on the financial value of what they leave behind.before distribution.

 

[drew]

I am absolutely staggered that the Tories are thinking that reducing IHT is in any way an answer to any of the myriad problems currently facing the UK.

Actually, on second thoughts, I’m not!!! Self-serving bastards who are only interested in a small minority of the population who will probably vote for them.

And any economic benefit (if there is one) would only feed through many years/decades in the future. It’s purely to buy votes.

Hopefully the majority of the electorate will be disgusted by this further evidence of the Tory party’s disdain for ordinary people.

I think it serves two purposes. Firstly, it helps the very people that Tories always want to help, the rich, their donors and sponsors etc etc. Secondly, because of the general lack of understanding by the population, helpful media headlines persuade many who have no chance of paying the tax, thinking it is a bad thing.

 

[Colonel Mustard]

Dead people do not pay tax. The tax is on the financial value of what they leave behind.before distribution.

Which is precisely what I said — "It’s the dead person, or rather his/her estate."

 

[um bongo molongo]

I think it serves two purposes. Firstly, it helps the very people that Tories always want to help, the rich, their donors and sponsors etc etc. Secondly, because of the general lack of understanding by the population, helpful media headlines persuade many who have no chance of paying the tax, thinking it is a bad thing.

Yep. Expect to see Daily Mail and Daily Express headlines about the ‘Death Tax’.

At the end of the day, all taxes will be unpopular, but to prioritise reducing this one at a time when many people are really struggling is just shameless electioneering.

 

[tedebear]

We're going to get this sort of stuff from now til the GE, have no doubt as its a Tory government...Rwanda for the right wingers, tax breaks for the wealthy, nothing of help for those sitting in NHS queues, reduced to using food banks or ithose in the freezing cold in their homes with no money for utilities...

 

[dazzer6666]

IHT doesn’t raise that much in relative terms (£7bn last year compared with £249 billion from income tax, £178 billion from NICs and £160 billion from VAT), and it’s fairly easily avoided or mitigated to a degree (through gifts, trusts and/or insurance) by anyone with a decent financial planner. Smacks of a headline-grabbing desperate throw of the dice by the outgoing government that won’t impact that many people at all but leaves them thinking they’ve been done a massive favour. Meanwhile, the huge corporates operating in the UK but paying bugger all tax continue to get away with it

 

[WATFORD zero]

As has been stated before, if you're a couple leaving your main residence to your children, they will only be taxed on that part over £1M and significant estates without any residential property are unusual. However all you ever see quoted is the £325K. The simple fact is that you have to be quite well off to pay significant Inheritance tax on your estate.

Just another example of the lies constantly told to the naïve and most vulnerable in Society to get them to vote against their interests yet again

 

[Baldseagull]

Not seen that before, are you sure that's right?

My point is, the tax is on the estate, not the beneficiaries, which can mean that an only child could receive up to £1M that has not been taxed, whereas another deceased's estate, without any residential property, with many offspring as beneficiaries, could pay considerable tax, though each beneficiary only receives a few thousand pounds.

 

[drew]

My point is, the tax is on the estate, not the beneficiaries, which can mean that an only child could receive up to £1M that has not been taxed, whereas another deceased's estate, without any residential property, with many offspring as beneficiaries, could pay considerable tax, though each beneficiary only receives a few thousand pounds.

Well the RNRB was introduced to satisfy traditional tory voters. Should remove that.

 

[loz]

Each individual has a nil rate band of £325k and a residence nil rate band of £175k. Therefore if a married couple have a house worth £350k or more, which they pass to a direct descendent, they have total allowances of £1m between them.
Therefore zero tax on anything below £1m and 40% tax above that threshold.
The residence nil rate band is also tapered down by £1 in every £2 that the estate is over £2m in total. So the very wealthy will only get a nil rate band of £325k each.
I would think that the Tories may look at reducing the tax rate from 40% somehow.
I expect it won’t have time for the legislation to be passed before they lose the general election anyway. The legislation on their abolition of the Lifetime Allowance on pensions still hasn’t been finalised.

Having just finished with my mum’s estate, the above is correct.

 

[Colonel Mustard]

As has been stated before, if you're a couple leaving your main residence to your children, they will only be taxed on that part over £1M, however all you ever see quoted is the £325K. Just another example of the lies constantly told to the poorest and most vulnerable in Society to get them to vote against their interests yet again

There are three key IHT thresholds for most people — £325k, £650k, and £1m. Individual circumstances will determine which of these apply to you. These three figures have been mentioned constantly in this thread, and will be in most news articles that explain what IHT is all about.

 

[WATFORD zero]

There are three key IHT thresholds for most people — £325k, £650k, and £1m. Individual circumstances will determine which of these apply to you. These three figures have been mentioned constantly in this thread, and will be in most news articles that explain what IHT is all about.

I agree they have been mentioned throughout this thread, but I only ever remember seeing £325K in any MSM headlines. And as is proven time and time again, that is as far as a significant proportion of people get

 

[Baldseagull]

Well the RNRB was introduced to satisfy traditional tory voters. Should remove that.

I think it's a bad idea too, for a number of reasons, for one it adds to housing problems, with older folk sometimes hanging on to a large family home when they could downsize to something more suitable for them, and free up a family sized home, because if they leave cash rather than property it will get taxed.

But my point would still stand, that an only child could receive a large lump that has not been subjected to tax, whilst siblings could receive much smaller individual sums from an overall larger estate that had been taxed, I am not sure if this aspect is particularly "fair". However you work it, those with a large sum exposed to tax will find ways to minimise or avoid it, and middle income people will be the ones most heavily taxed, proportionally.

 

[Peteinblack]

Interesting that Tories are obsessed with inheritance, when they also keep insisting that people should "stand on their own two feet, and not rely on handouts from others." That's exactly what inheritance is - a handout derived from someone else's work or efforts!

A few years ago, this argument (about self-reliance and dependency) was being trotted out by a snooty Tory girl in our local book-club. When I asked her how long it had taken her to save the deposit on her city-centre apartment in Bath, she replied that "mummy and daddy gave me the money." The irony - or hypocrisy - was totally lost on her!

 

[Wardy's twin]

Odd decision as I think I read that only 6% pay it and if you do pay it then you've inherited a pretty large sum. The first £300 odd grand is tax free and even then allowances can be transferred to increase it.

its not what you inherit its what you leave.

325k to one person who earns £100k a year no tax,

625k split to 10 people on lower level tax means the government gets £120k in tax.

there are variations but really needs a bit more tweaking if its about levelling up....

 

[Wardy's twin]

I think it's a bad idea too, for a number of reasons, for one it adds to housing problems, with older folk sometimes hanging on to a large family home when they could downsize to something more suitable for them, and free up a family sized home, because if they leave cash rather than property it will get taxed.

But my point would still stand, that an only child could receive a large lump that has not been subjected to tax, whilst siblings could receive much smaller individual sums from an overall larger estate that had been taxed, I am not sure if this aspect is particularly "fair". However you work it, those with a large sum exposed to tax will find ways to minimise or avoid it, and middle income people will be the ones most heavily taxed, proportionally.

surely its the value of the estate and that includes market value of the house.

totally agree with second point