Quick question - inheritance tax...

Quick question - inheritance tax...

Author
Discussion

Burwood

18,709 posts

245 months

Tuesday 2nd February 2016
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And you're ok with that twig? I'm not. Having to sell a family home to pay taxes is repugnant.

Bill

52,485 posts

254 months

Tuesday 2nd February 2016
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QuickQuack said:
You can only transfer allowance if the spouse died while they were married but not if they had divorced prior to the death. As a result, it is possible for someone to have multiple allowances transferred if they lost multiple spouses through death while married, but that isn't the case for divorced couples. The allowance isn't transferred at the time of first death, it's transferred after the second death by the executor(s) of the second estate by submitting Form IHT217 to transfer the nil rate band, this has to be done within 24 months of the second death. The executor(s) of the first estate have to keep records showing how much can be transferred and give these to the surviving partner and/or the executor(s) of their will.
That makes much more sense. biggrin I was confused by the "even if they remarry" bit.

Edited by Bill on Tuesday 2nd February 22:11

mph1977

12,467 posts

167 months

Tuesday 2nd February 2016
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QuickQuack said:
<snip>

The super rich do avoid IHT as well as other forms of tax so those earning several hundred thousand to several million pounds a year often don't pay anything. Those in the middle get fleeced. I don't have enough to be able to put hundreds of thousands/millions into schemes where I can't touch the money nor pay fees of tens of thousands of pounds a year to maintain them, so I get screwed over with a ridiculous income tax while alive, then my daughter will get screwed over when I die

<snip>

.
some of the 'tricks' used by the superrich aren;t exactly quite a good as they first appear such as putting their property in trust then paying market rents for the stuff they use ( and other people and businesses paying market rents to the trust to use the bits they use)

also in real terms having to worry about the loss of the personal allowance doesn;t put you in the 'middle' it puts you in the top few % ... the upper end of the actual middle worry aobut hitting 40% bracket and having to do a tax retrun and/or loss of child benefit ...


also i'm not sure where the suggestion of 90 % marginal tax rates comes from - a recent graph fro mthe telegraph shows 60 % marginal tax rates and hitting 70 % if you are especially fecund ...

QuickQuack

2,144 posts

100 months

Tuesday 2nd February 2016
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TwigtheWonderkid said:
mikees said:
I'm against iht as I've already paid 40% on it
I doubt that. If you are anything like me, and most people who will leave to their kids an amount far in excess of the IHT threshold, the vast majority of it is due to London house price inflation, on which I've paid no tax whatsoever.

I know it sounds cool to say "I've worked for every penny I've got" and "I've already paid tax on my money once", but for most people it's delusional nonsense.

Sorry if that pricks anyone's ego balloon.
Not everyone lives in effing London! I fact, just under 90% of the country don't live in London, it isn't the centre of the damn universe.

House prices where I live haven't moved much for the last 10 years, so yes, I bloody well have worked for every penny I have. In fact, having just done a quick internet search, the county I live in has had the lowest house price inflation over the last decade: 14% over 10 years. I would've got more if I had put the money in high interest bonds over that time. Just because you're in a London bubble, don't assume the whole country is the same.

JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
QuickQuack said:
Not everyone lives in effing London! I fact, just under 90% of the country don't live in London, it isn't the centre of the damn universe.

House prices where I live haven't moved much for the last 10 years, so yes, I bloody well have worked for every penny I have. In fact, having just done a quick internet search, the county I live in has had the lowest house price inflation over the last decade: 14% over 10 years. I would've got more if I had put the money in high interest bonds over that time. Just because you're in a London bubble, don't assume the whole country is the same.
So how much is your house worth? As said by a few now, you're a top earner, certainly in the top 3% in the country based on the info you've disclosed. That makes you a fat cat trying to avoid tax, however you'll be viewed as someone trying to evade tax by the majority of the population, much as you view Google.

TwigtheWonderkid

43,248 posts

149 months

Tuesday 2nd February 2016
quotequote all
QuickQuack said:
TwigtheWonderkid said:
mikees said:
I'm against iht as I've already paid 40% on it
I doubt that. If you are anything like me, and most people who will leave to their kids an amount far in excess of the IHT threshold, the vast majority of it is due to London house price inflation, on which I've paid no tax whatsoever.

I know it sounds cool to say "I've worked for every penny I've got" and "I've already paid tax on my money once", but for most people it's delusional nonsense.

Sorry if that pricks anyone's ego balloon.
Not everyone lives in effing London! I fact, just under 90% of the country don't live in London, it isn't the centre of the damn universe.

House prices where I live haven't moved much for the last 10 years, so yes, I bloody well have worked for every penny I have. In fact, having just done a quick internet search, the county I live in has had the lowest house price inflation over the last decade: 14% over 10 years. I would've got more if I had put the money in high interest bonds over that time. Just because you're in a London bubble, don't assume the whole country is the same.
The vast majority of people whose estates will attract IHT live in London and the South east. That's a fact.

JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
Burwood said:
And you're ok with that twig? I'm not. Having to sell a family home to pay taxes is repugnant.
Is your house worth over £850k if not there will be £0 IHT to pay, avoid dying before 2020 amd that will be £1million with £0 tax on the family home.

Are you still affected?

TwigtheWonderkid

43,248 posts

149 months

Tuesday 2nd February 2016
quotequote all
Burwood said:
And you're ok with that twig? I'm not. Having to sell a family home to pay taxes is repugnant.
Why? In the majority of cases, the kids will be in their 30s/40s/50s and not be living there anyway. They have inherited a family home worth a million plus, that they themselves haven't worked for, which was bought by their parents for a fraction of that price and no tax has ever been paid on the increase in value.


QuickQuack

2,144 posts

100 months

Tuesday 2nd February 2016
quotequote all
mph1977 said:
some of the 'tricks' used by the superrich aren;t exactly quite a good as they first appear such as putting their property in trust then paying market rents for the stuff they use ( and other people and businesses paying market rents to the trust to use the bits they use)

also in real terms having to worry about the loss of the personal allowance doesn;t put you in the 'middle' it puts you in the top few % ... the upper end of the actual middle worry aobut hitting 40% bracket and having to do a tax retrun and/or loss of child benefit ...


also i'm not sure where the suggestion of 90 % marginal tax rates comes from - a recent graph fro mthe telegraph shows 60 % marginal tax rates and hitting 70 % if you are especially fecund ...
Precisely regarding the tricks used by the super-rich, you really do have to have a lot of money behind you to be able to do it.

Regarding the marginal rate, I allocate the first tranche of money I earn for essentials and living: mortgage, kids, food, clothing, utilities etc., so those are subject to 50-70% tax by the time you add on NI. The rest goes for savings and investments for the future. As I lose the tax free allowance, if I earn an extra £10, I lose £5 of allowance and pay another £4 in tax so I ge to take home £1 out of £10 earned. The marginal rate on that £10 is 90%.

Edit: Forgot to add. The savings, therefore whatever I will end up passing down when I die, come from that part on which I have paid a silly marginal rate.

Edited by QuickQuack on Tuesday 2nd February 22:27

Toltec

7,159 posts

222 months

Tuesday 2nd February 2016
quotequote all
JacquesMesrine said:
Is your house worth over £850k if not there will be £0 IHT to pay, avoid dying before 2020 amd that will be £1million with £0 tax on the family home.

Are you still affected?
So when did that come in? I thought it was £650K if the estate is that of a widow/er.



JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
Toltec said:
So when did that come in? I thought it was £650K if the estate is that of a widow/er.
If someone is that fussed about these things, then said person should keep their knowledgeup to date before ranting.

http://www.moneysavingexpert.com/news/mortgages/20...

QuickQuack

2,144 posts

100 months

Tuesday 2nd February 2016
quotequote all
Toltec said:
So when did that come in? I thought it was £650K if the estate is that of a widow/er.
The nil rate for the family home only is going up to £1m in stages between 2017 and 2020.

MrChips

3,263 posts

209 months

Tuesday 2nd February 2016
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Unless i've missed something, those new rules don't benefit people who have had to sell their home in order to pay for healthcare/care home in their final years?

bladerrw

128 posts

127 months

Tuesday 2nd February 2016
quotequote all
QuickQuack said:
Precisely regarding the tricks used by the super-rich, you really do have to have a lot of money behind you to be able to do it.

Regarding the marginal rate, I allocate the first tranche of money I earn for essentials and living: mortgage, kids, food, clothing, utilities etc., so those are subject to 50-70% tax by the time you add on NI. The rest goes for savings and investments for the future. As I lose the tax free allowance, if I earn an extra £10, I lose £5 of allowance and pay another £4 in tax so I ge to take home £1 out of £10 earned. The marginal rate on that £10 is 90%.

Edit: Forgot to add. The savings, therefore whatever I will end up passing down when I die, come from that part on which I have paid a silly marginal rate.

Edited by QuickQuack on Tuesday 2nd February 22:27
If it makes you feel better, it's only 60%.

QuickQuack

2,144 posts

100 months

Tuesday 2nd February 2016
quotequote all
JacquesMesrine said:
QuickQuack said:
Not everyone lives in effing London! I fact, just under 90% of the country don't live in London, it isn't the centre of the damn universe.

House prices where I live haven't moved much for the last 10 years, so yes, I bloody well have worked for every penny I have. In fact, having just done a quick internet search, the county I live in has had the lowest house price inflation over the last decade: 14% over 10 years. I would've got more if I had put the money in high interest bonds over that time. Just because you're in a London bubble, don't assume the whole country is the same.
So how much is your house worth? As said by a few now, you're a top earner, certainly in the top 3% in the country based on the info you've disclosed. That makes you a fat cat trying to avoid tax, however you'll be viewed as someone trying to evade tax by the majority of the population, much as you view Google.
My house is worth a lot but all of it is paid for from earnings, life savings and the mortgage; the equity is not from house price inflation in the last 6 years because, as I've explained before, where I live the prices have hardly moved.

And how exactly did you get to the conclusion that I'm I trying to avoid or evade tax? I pay all the tax legally due on all my earnings, nothing is hidden, not even my income from outside the EU which the HMRC has no way of finding out except that I declare it as those are the rules. Just because I don't like the rules doesn't mean I break them. I don't even break the spirit of the rules, even though I disagree with them. Unlike Google, who find loopholes to get around the rules they don't like. I might well be a mug for not finding ways of reducing my tax bill, but I would rather be a grumpy mug than a tax evader.

JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
ash73 said:
JacquesMesrine said:
Is your house worth over £850k if not there will be £0 IHT to pay
Are you a time traveller?
Yes, you only need 1.21 gigawatts and a car insured by Flux, or something like that.

JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
QuickQuack said:
My house is worth a lot but all of it is paid for from earnings, life savings and the mortgage; the equity is not from house price inflation in the last 6 years because, as I've explained before, where I live the prices have hardly moved.

And how exactly did you get to the conclusion that I'm I trying to avoid or evade tax? I pay all the tax legally due on all my earnings, nothing is hidden, not even my income from outside the EU which the HMRC has no way of finding out except that I declare it as those are the rules. Just because I don't like the rules doesn't mean I break them. I don't even break the spirit of the rules, even though I disagree with them. Unlike Google, who find loopholes to get around the rules they don't like. I might well be a mug for not finding ways of reducing my tax bill, but I would rather be a grumpy mug than a tax evader.
I'm putting options out there and there is nothing wrong with avoiding paying tax. I maximise my ISA allowances, pay a lot into my pension scheme and have plenty of other tax breaks on the go. I'm not accusing you of dodging tax, I'm saying how others will portray you for trying to maximise your legitimate tax avoidance approach.

The thing about IHT is that it actually doesn't matter. You aren't directly affected, as you're dead. Your partner isn't affected as there's £0 to pay on transfers no matter how big the estate (the same applies if the deaths are in the opposite order). It's only your children, or other beneficiaries, who tend to be affected by a reduced inheritance. However, if everyone got all the money, then the reality is that house price inflation, or other assets would just be more expensive as everyone gets to keep all their money.

The loss of revenue would have to be made up another way, so that's likely to be a tax whilst you're alive. Personally, I'd rather pay taxes after I'm dead, than while I'm alive and it affects me directly.

Toltec

7,159 posts

222 months

Tuesday 2nd February 2016
quotequote all
JacquesMesrine said:
Toltec said:
So when did that come in? I thought it was £650K if the estate is that of a widow/er.
If someone is that fussed about these things, then said person should keep their knowledgeup to date before ranting.

http://www.moneysavingexpert.com/news/mortgages/20...
As I thought, this is not yet in force.

Only slightly bitter this is going to cost me the equivalent of all I will earn for the next five years because they failed to honour an election promise five years ago.




JacquesMesrine

329 posts

133 months

Tuesday 2nd February 2016
quotequote all
Toltec said:
As I thought, this is not yet in force.

Only slightly bitter this is going to cost me the equivalent of all I will earn for the next five years because they failed to honour an election promise five years ago.
Firstly, sorry for your loss and I hope you remember the good times with your parents. I'm assuming that, as there is zero IHT between partners (unless unmarried). However, as you've put this in financial terms then I'm going to have a go at explaining that too.

You are now at most £350k worse off on allowances than the max possible on this. That means a maximum tax bill of £140,000. If that is five years income then that equates to an annual income of £28,000 per year. The challenge here is that if the house is your parents then it's not an entitlement as such and if everyone got their parents homes tax free then there would be more money sloshing around so everything would naturally cost more.

If this is your problem with your unmarried partner, then again, my condolences, but there was a simple way to avoid the tax legally and simply.

Edited by JacquesMesrine on Wednesday 3rd February 07:15

Burwood

18,709 posts

245 months

Tuesday 2nd February 2016
quotequote all
TwigtheWonderkid said:
Burwood said:
And you're ok with that twig? I'm not. Having to sell a family home to pay taxes is repugnant.
Why? In the majority of cases, the kids will be in their 30s/40s/50s and not be living there anyway. They have inherited a family home worth a million plus, that they themselves haven't worked for, which was bought by their parents for a fraction of that price and no tax has ever been paid on the increase in value.
Because it is the most basic human instinct . A private home, no matters it's worth should never attract taxation and there are no guarantees in life what age my kids will be.