Liz Truss Prime Minister

[NerveAgent]

Killboy said:

motco said:

£289k it was about 2010

Wasn't that a little under band?

Looks like the threshold was 325000 in 2010 so looks like her cash assets were more than the “little” proclaimed.

[silentbrown]

Killboy said:

Wasn't that a little under band?

Yes, so must have been other assets.

No main residence allowance in 2010, of course.

Also wouldn't there have been a nil-rate carry over from her husband?

[motco]

Killboy said:

motco said:

£289k it was about 2010

Wasn't that a little under band?

I cannot remember the cash amount she had but it tipped it into the band and a tax of a couple of thousand resulted. But it's the principle, not the amount. Every penny was hard earned and tax paid on it already. The house obviously rose in value but it was still the same house and inflation in the meantime made that rise relatively insignificant. In fact the house wasn't sold straight away so there was CGT to pay on the eventual sales value stated except that there were four heirs and each had a personal allowance which covered that.

[NerveAgent]

motco said:

Killboy said:

motco said:

£289k it was about 2010

Wasn't that a little under band?

I cannot remember the cash amount she had but it tipped it into the band and a tax of a couple of thousand resulted. But it's the principle, not the amount. Every penny was hard earned and tax paid on it already. The house obviously rose in value but it was still the same house and inflation in the meantime made that rise relatively insignificant. In fact the house wasn't sold straight away so there was CGT to pay on the eventual sales value stated except that there were four heirs and each had a personal allowance which covered that.

Not trying to pick here but can you understand why people don’t really consider the £288200 increase in house price as “every penny hard earned” and having to pay a couple of grand (which probably wouldn’t be the case today with the higher bands and transfers available) tax being “hard done by” and “unfair”?

Plenty of people won’t inherit anything. Would you rather they pay more tax on income to compensate for abolishing IHT. Do you think this seems more “fair”?

£800 in 1938 would be £44,490.04 in todays money.

Edited by NerveAgent on Monday 20th November 10:00

[motco]

NerveAgent said:

motco said:

Killboy said:

motco said:

£289k it was about 2010

Wasn't that a little under band?

I cannot remember the cash amount she had but it tipped it into the band and a tax of a couple of thousand resulted. But it's the principle, not the amount. Every penny was hard earned and tax paid on it already. The house obviously rose in value but it was still the same house and inflation in the meantime made that rise relatively insignificant. In fact the house wasn't sold straight away so there was CGT to pay on the eventual sales value stated except that there were four heirs and each had a personal allowance which covered that.

Not trying to pick here but can you understand why people don’t really consider the £288200 increase in house price as “every penny hard earned” and having to pay a couple of grand (which probably wouldn’t be the case today with the higher bands and transfers available) tax being “hard done by” and “unfair”?

Plenty of people won’t inherit anything. Would you rather they pay more tax on income to compensate for abolishing IHT. Do you think this seems more “fair”?

As I said before, it is the principle, not the amount. Hardly anyone outside the Home Counties would be affected by a tax which was introduced to catch the very wealthy, not the working class family who took responsibility for their lives and thought that taking benefits was shameful. My inlaws never drew any form of benefits bar the state pension and always worked for their living.

[Killboy]

motco said:

As I said before, it is the principle, not the amount. Hardly anyone outside the Home Counties would be affected by a tax which was introduced to catch the very wealthy, not the working class family who took responsibility for their lives and thought that taking benefits was shameful. My inlaws never drew any form of benefits bar the state pension and always worked for their living.

While I get this is a little emotive, its a bit odd. And there is a little more to the story than the house now. She has not been taxed, her estate was and thus the beneficiaries. Did they hard earn this 34900% increase in value?

[NerveAgent]

motco said:

As I said before, it is the principle, not the amount. Hardly anyone outside the Home Counties would be affected by a tax which was introduced to catch the very wealthy, not the working class family who took responsibility for their lives and thought that taking benefits was shameful. My inlaws never drew any form of benefits bar the state pension and always worked for their living.

Your in laws weren’t affected in any way.

Tax has no awareness of someones politics, location or “feels”.

[valiant]

Killboy said:

While I get this is a little emotive, its a bit odd. And there is a little more to the story than the house now. She has not been taxed, her estate was and thus the beneficiaries. Did they hard earn this 34900% increase in value?

It's slightly strange as the the MiL have not been taxed. She hasn't paid a penny and nor will she because,well, she's dead

The estate may be liable but firstly it's not your MiL's problem because she's still dead and the beneficiaries are still in line for a windfall that wasn't earned. They'll still end up with a nice payout except the government wants it's cut.

It's a similar vein to those complaining about having to sell their parents future inherited home to pay for care home fees yet are quite happy for the taxpayer to pick up the bill instead.

[Derek Smith]

S600BSB said:

I think IHT is fundamentally unfair and should be abolished. However, given the perilous state of the public finances, and the fact that it impacts such a tiny % of the population, it certainly wouldn’t be my priority.

It's a tax on the dead. I've been told you can't take it with you. In any case, I expect they have little use for it if 'camel hair' is true. So hardly unfair. My assumption is that few have complained.

[AstonZagato]

You then get to the five foolish virgins problem.

If assets are taxed on death, then one disposes of assets through life and have little to fund retirement/end of life care.

Equally, if assets are not taxed, then the wealth gap perhaps increases (though generally the "rags to riches to rags" over three generations rule applies anyway).

[Derek Smith]

AstonZagato said:

You then get to the five foolish virgins problem.

If assets are taxed on death, then one disposes of assets through life and have little to fund retirement/end of life care.

Equally, if assets are not taxed, then the wealth gap perhaps increases (though generally the "rags to riches to rags" over three generations rule applies anyway).

I'm not sure the bit about disposal necessarily follows.

I was nominated as executor of the will of a neighbour. The sole beneficiary was her son, whom she hadn't seen in the 10 years that I knew her. She had some assets which required me to hire a lawyer and I mentioned to her that it seemed odd that the deceased wanted the son who couldn't give a damn about her to get all her money. I was told it was normal and that what was also common was old people not giving assets, such as houses, to their children in case they turfed them out. She said she was always including codicils(?) to stop kids being [add your own word here].

I take your point about the virgins, but the bible is either the inspired word of a god or it's all made up. Either way, they leave it all behind.

I feel it's unearned income, and should be taxed as such.

[skwdenyer]

konark said:

skwdenyer said:

As I've suggested, just make it 5% on all estates. Hard to argue that would be unfair.

So people who work for a living get taxed at 20% to 40% plus ni whilst those who just hold their hand out get taxed at 5%, yeah that encourages hard work doesn't it.

At the moment, IHT is 0% up to a certain level (which varies with circumstance). So I'm proposing 5% on all estates, which would raise as much money as the current cliff-edge scheme raises.

Unsure why my suggestion is worse than the current set-up on your terms?

[silentbrown]

skwdenyer said:

At the moment, IHT is 0% up to a certain level (which varies with circumstance). So I'm proposing 5% on all estates, which would raise as much money as the current cliff-edge scheme raises.

One of the main IHT 'planning' techniques is gifts :£100m in shares? Give £95m to children seven years before you go, and it's tax free. Plenty left to cover any nursing care, etc. Doesn't work so well if you've only got 20K in savings and need to live in your house.

Basically, the richer you are, the smaller the effective IHT tax percentage will be, as you'll get plenty of advice on how to avoid it.

[skwdenyer]

silentbrown said:

skwdenyer said:

At the moment, IHT is 0% up to a certain level (which varies with circumstance). So I'm proposing 5% on all estates, which would raise as much money as the current cliff-edge scheme raises.

One of the main IHT 'planning' techniques is gifts :£100m in shares? Give £95m to children seven years before you go, and it's tax free. Plenty left to cover any nursing care, etc. Doesn't work so well if you've only got 20K in savings and need to live in your house.

Basically, the richer you are, the smaller the effective IHT tax percentage will be, as you'll get plenty of advice on how to avoid it.

The cliff edge of the current setup is a problem. So ditch it. Unless your specific objective is to tax estates worth, say £1-3m (which is pretty much most of the IHT, since above that level planning starts to become cost-effective).

It is a ludicrous tax right now. You’re arguing for the status quo with the full knowledge that those with substantial estates avoid it. Why? Surely better to consider alternatives?

It used to be the case, for instance, that gifts were taxed. So let’s go back to that, but at a similarly-low rate (say, 5%), so it becomes a cost of doing business as it were & not something worth spending a lot to avoid.

[Carl_VivaEspana]

"Die Hard 2 - just like Die Hard 1 but in an airport."

[silentbrown]

skwdenyer said:

The cliff edge of the current setup is a problem. So ditch it. Unless your specific objective is to tax estates worth, say £1-3m (which is pretty much most of the IHT, since above that level planning starts to become cost-effective).
It is a ludicrous tax right now. You’re arguing for the status quo with the full knowledge that those with substantial estates avoid it. Why? Surely better to consider alternatives?

It used to be the case, for instance, that gifts were taxed. So let’s go back to that, but at a similarly-low rate (say, 5%), so it becomes a cost of doing business as it were & not something worth spending a lot to avoid.

Who said I'm arguing for the status quo?

But, the "cliff edge" angle is frankly nonsense. £325,000 : zero tax. £325,001 : 40p tax.
Are you going to tax the 50% of estates that don't even have to go through probate, or is that the new cliff edge?

Gifts I think taxing gifts makes a huge amount of sense. Don't recall that *ever* being in the UK, but France certainly have it. https://beaconglobalwealth.com/what-is-french-gift...

I'm deeply suspicious of Tory claims of a "tax cut". If the tax take drops, somethings's got to make up the difference. Either tax elsewhere, or further cuts in spending. The devil will, as always, be in the detail.

[Countdown]

Looking at some stats it seems like the average IHT bill is £214k which (back of a fag packet) suggests that the average estate having to pay IHT is worth £1.5m.

That isn't "poor" by any means.

[silentbrown]

Countdown said:

Looking at some stats it seems like the average IHT bill is £214k which (back of a fag packet) suggests that the average estate having to pay IHT is worth £1.5m.

That isn't "poor" by any means.

Interesting chart from https://www.gov.uk/government/statistics/inheritan...

[deckster]

Countdown said:

Looking at some stats it seems like the average IHT bill is £214k which (back of a fag packet) suggests that the average estate having to pay IHT is worth £1.5m.

That isn't "poor" by any means.

Lies, damn lies, etc.

Is that the mean, median or mode? Don't make the mistake of thinking that the distribution of estates will look anything like a bell curve. There will be a huge preponderance of estates close to the limit, a rapid drop off to the value you mention, and then a very long tail of large estates that disproportionately affect the mean IHT paid. Almost everybody who pays IHT will be at the lower end of the scale.

[skwdenyer]

silentbrown said:

skwdenyer said:

The cliff edge of the current setup is a problem. So ditch it. Unless your specific objective is to tax estates worth, say £1-3m (which is pretty much most of the IHT, since above that level planning starts to become cost-effective).
It is a ludicrous tax right now. You’re arguing for the status quo with the full knowledge that those with substantial estates avoid it. Why? Surely better to consider alternatives?

It used to be the case, for instance, that gifts were taxed. So let’s go back to that, but at a similarly-low rate (say, 5%), so it becomes a cost of doing business as it were & not something worth spending a lot to avoid.

Who said I'm arguing for the status quo?

But, the "cliff edge" angle is frankly nonsense. £325,000 : zero tax. £325,001 : 40p tax.
Are you going to tax the 50% of estates that don't even have to go through probate, or is that the new cliff edge?

Gifts I think taxing gifts makes a huge amount of sense. Don't recall that *ever* being in the UK, but France certainly have it. https://beaconglobalwealth.com/what-is-french-gift...

I'm deeply suspicious of Tory claims of a "tax cut". If the tax take drops, somethings's got to make up the difference. Either tax elsewhere, or further cuts in spending. The devil will, as always, be in the detail.

Cliff edge means exactly that - no tax, then suddenly tax, with no progression. That's what we have right now.

As the graph posted by somebody else shows, it only catches the somewhat-better-off - the actually wealthy avoid it.

It is also an *estate* tax - it speaks not of the recipients. Why? Surely there should simply be a taxation of unearned income? An estate of £2m with 10 equal beneficiaries pays tax; an estate of £200k with 1 beneficiary pays none.

The principle of wealth redistribution should mean encouraging estates to distribute widely. Taxation of recipients would encourage that.

But as I said, just taxing all estates at 5% would be fair, equitable, and a disincentive to avoidance. I suspect the overall take would go up.