9.9bn Quid, 0% tax. Tell me PH, How is this fair?

[iphonedyou]

Zombie said:

And scary in some respects. Hosenburgler is doing a decent job of discrediting that perspective though.

As the OP I wish to clarify my question though, it's not about whether IHT is fair, its about why are the super rich allowed to completely avoid it.

Given that the current rate charged is 40% of the value of estates over £325,000, It's not a tax that most people will have to pay and that should apply to most who populate this forum.

By what means are the super rich - who is that, out of interest? - allowed to avoid it, that others aren't?

Genuine question.

[TwigtheWonderkid]

RYH64E said:

That's what I'm doing, my daughter starts at university this year so I'll be buying her her first house next year, my boy starts a couple of years later and I'll do the same for him,

That's a shame. Struggling to save a deposit (or at least most of it if the parents wish to help), getting a mortgage and then working hard to keep your head above water is something to be looked back upon and cherished when you finally get established in your career and finish paying off your mortgage.

It's a great shame they will never have that joy, paying off the mortgage after a couple of decades of hard graft.

[The Moose]

TwigtheWonderkid said:

RYH64E said:

That's what I'm doing, my daughter starts at university this year so I'll be buying her her first house next year, my boy starts a couple of years later and I'll do the same for him,

That's a shame. Struggling to save a deposit (or at least most of it if the parents wish to help), getting a mortgage and then working hard to keep your head above water is something to be looked back upon and cherished when you finally get established in your career and finish paying off your mortgage.

It's a great shame they will never have that joy, paying off the mortgage after a couple of decades of hard graft.

On the other hand he could be ensuring his kids aren't enslaved to a mortgage company for 20-30 years allowing them to pursue whatever they want as opposed to pursuing cash.

[djc206]

The Moose said:

TwigtheWonderkid said:

RYH64E said:

That's what I'm doing, my daughter starts at university this year so I'll be buying her her first house next year, my boy starts a couple of years later and I'll do the same for him,

That's a shame. Struggling to save a deposit (or at least most of it if the parents wish to help), getting a mortgage and then working hard to keep your head above water is something to be looked back upon and cherished when you finally get established in your career and finish paying off your mortgage.

It's a great shame they will never have that joy, paying off the mortgage after a couple of decades of hard graft.

On the other hand he could be ensuring his kids aren't enslaved to a mortgage company for 20-30 years allowing them to pursue whatever they want as opposed to pursuing cash.

This.

As someone with a substantial mortgage I can safely say that there is nothing joyful about 6 figure debt or knowing that I will be paying over a quarter of a million pounds in interest over the course of my lifetime. The things that bring me joy are my relationship, travelling the world, nice cars, good food and lots of booze. Without a mortgage my life would be better and as such if I ever have kids and the means to help them live their lives to the full I will jump at the opportunity.

[Talksteer]

Guybrush said:

If inheritance tax were abolished, it doesn't mean the state will never see the money. If fact, they may see more in the form of VAT on goods purchased, more employment (people spending more) and goodwill from knowing what you are working for may benefit your children and their families. Taking money by force in the form of a tax on those who have assets is surely unjustified. It's clear it's destructive, otherwise farms, the royal family and other inheritance tax exempt groups would not be exempt.

Unfortunately not true, money passed on as inheritance has a tendency to be saved not spent and when it is spent it tends to be be spent inflating the the cost of assets like land, property and art. If it were taxed it would get immediately recycled back into the economy.

Inheritance is essentially a means by which wealth is concentrated, concentrated wealth lowers the velocity of money and this is a negative effect on the economy.

The reason certain things are exempt is more a measure of political power/concentrated interests than because it is right that they are.

[MrBarry123]

The Moose said:

I'm not entirely sure that having a net worth of over £325k classifies anyone as part of the "super rich".

As far as I understand it, pretty much anyone can avoid most/all IHT if they so desire. How is that unfair?

A very large amount of people in the South East easily exceed this amount with their property alone, and with completely average and not at all impressive properties.

[mikees]

iphonedyou said:

Zombie said:

And scary in some respects. Hosenburgler is doing a decent job of discrediting that perspective though.

As the OP I wish to clarify my question though, it's not about whether IHT is fair, its about why are the super rich allowed to completely avoid it.

Given that the current rate charged is 40% of the value of estates over £325,000, It's not a tax that most people will have to pay and that should apply to most who populate this forum.

By what means are the super rich - who is that, out of interest? - allowed to avoid it, that others aren't?

Genuine question.

At 325, it's a tax that most, even lowly successful people in the south will pay, and anyone moderately successful in the rest of the U.K. Will pay. 325 won't buy a lot in the SE.

As I said easily avoided.

But back to the OP, the new DoW is not worth 9b, the trusts own this and the trustees manage it, and pay him some (no idea how much). He is not worth 9b.

Out of interest, do people, think we should all start with nothing? Maybe interesting idea, but not for me.

I have all my assets sown up in trust that mean they can't be pissed away by future generations but always retained and move on to the next. Why would you not, if you can?

I'm sure TB and sidicks will agree, others, not so much.

Does anyone not want to look after their children and their children's children?

Mike

[Talksteer]

sidicks said:

BJG1 said:

I'm not a socialist, I'm a free-market capitalist and classical liberal

I'm likely to both inherit and leave estates on which swignificant amounts of IHT are due, so I don't think I'd consider myself envious or jealous either. I've done plenty well enough for myself to not cast envious eyes at the wealth of others.

I don't think it's my business to know what others have and I've not said anything to that effect in this thread. I've simply supported the idea of returning assets to the market from which they were purchased on death and ensuring we don't entrench wealth, leading to inefficient use of assets.

There's no need to be so aggressive and angry, as I said, I just have a different opinion to you on how to create the fairest society. No need to get so worked up by it and continue to attack individuals rather than make any sort of coherent argument in favour of your position.

Giving more money to the government is hardly 'making efficient use of assets'...!

It's probably more efficient than retaining it in property. If it was vested in a company making a good return and IHT was likely to result in said business being broken up then it might be a stronger argument.

Also IHT effectively finances a tax cut for working people which is definitely more efficient.

Whatever your views on the amount of tax to be paid I'd much prefer that tax be paid by the dead (or from people receiving large unearned payments) than the living.

[Zombie]

iphonedyou said:

By what means are the super rich - who is that, out of interest? - allowed to avoid it, that others aren't?

Genuine question.

£9,900,000,000

Not

£325,000

If he had paid what was due then the amount (affluent) Joe Public wouldn't have to pay until a higher limit.

[djc206]

Zombie said:

£9,900,000,000

Not

£325,000

If he had paid what was due then the amount (affluent) Joe Public wouldn't have to pay until a higher limit.

It's not due though

[Zombie]

djc206 said:

It's not due though

Why not?

[djc206]

Zombie said:

Why not?

Because it's not his money

[Zombie]

djc206 said:

Because it's not his money

[djc206]

Zombie said:

djc206 said:

Because it's not his money

Good old trusts. Interestingly the guardian newspaper that so opposes this collection of trusts and their ineligibility for IHT is owned by a trust.

[djc206]

Zombie said:

This is an interesting read:
http://moneyweek.com/how-the-duke-of-westminster-d...

Basically young Hugh can't just flog the lot and fk off to Monaco in his Citation with £9billion in his pocket.

[Randy Winkman]

Anyway, I assume the late Duke's 4 children are each going to inherit an equal share of all this money?

[dvs_dave]

The issue I think with IHT is the punitive level that it's at. 40% is a piss take and as a consequence encourages avoidance.

Make it 15% and I think it would probably end up netting more tax £ as for most that's not enough to make it worthwhile trying to avoid, whilst simultaneously having most people think it's a fair and reasonable tax.

[PurpleMoonlight]

Yes with a bit of planning and luck IHT can be mitigated for most that it would apply to.

But why should people have to go to such extremes with their wealth?

Why should OAP's have to sell their home and hope they live another 7 years?

IHT provided only £5BN last tax year out of a total £533BN. It could easily be abolished, and made up elsewhere if needed.

The Government recently made the inheritance of pension funds tax free on death before age 75, and they were tax free going in and enjoyed tax free growth. Where is the logic?

[Guybrush]

RYH64E said:

Guybrush said:

You're missing the effect of what could perhaps be described as a 'moral hazard' effect of inheritance tax. If it were high enough, far fewer people would bother making anything in their lifetime if they knew it would all be taken away. (Put simply, they wouldn't work as hard.) To a great extent, much of one's effort is based upon the knowledge that one's family (or anyone chosen) will inherit. Taken to extremes, you get the extreme left wing effect of high taxation where an individual's and therefore the country's productivity is extremely low. (I realise there are other reasons for a country performing poorly under left wing rule, but disenchantment is a major one.)

That's pretty much nonsense though, if you're accruing income for your family why wait until you're dead to give it to them? I'm only in my 50s and I'm already looking into the best ways to transfer assets to my teenaged children (without leaving them vulnerable to loss should they get married then divorced in the distant future). Unless something goes badly wrong, our estate will be well below the insurance tax threshold by the time we both die.

That's fine if you are planning and taking steps to avoid the tax (and have an estate of appropriate size and makeup). Why should that have to be the case? (It can be quite complicated and an earner for the legal profession to manage.) Taking steps to avoid it skews what you may otherwise do and not everyone is in a position to avoid it.

[Guybrush]

BJG1 said:

Guybrush said:

Exactly, and why shouldn't the (now) deceased have been free to give all of their own money to whomever they wish? It's clearly and envy and resentment tax clothed in a righteous veneer by its supporters.

They are free to do so whilst they are alive. If your kids mean that much to you give them what you have well in advance of your death?

I think we are a long way from being a meritocracy and IHT is one way or moving closer to that. Advantaging one person has an impact down the chain disadvantaging another as fewer assets are available on the market

Children may be too young to manage the money 'in advance'. Plus, it's not always easy to disentangle assets while alive, one may be living in it (and not able to downsize).