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Inheritance Tax Penalty: who pays?

CatRyan said:
In principle I agree but I think there should be a caveat for London properties being inherited by youths who live there.
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Why though? They're gaining a massive freebie. They could always sell the house and buy a smaller one.

Youngster A: Parents die and leave next to nowt. Just crack on son... you'll have to find your own way through life.
Youngster B: Parents die and leave a £1 million house, which Youngster B then sells, pays whatever IHT is due and walks away 700 large in cash (or whatever it is) which he didn't earn himself. He's won the lottery.

Youngster B is still far better off just because he had wealthy parents. I think it is tacky for him to complain about his situation.

Also, I don't think tax laws should have caveats giving those who live in any specific region special exceptions. The investment that London and the SE gets is already way higher than that of the NW and NE for example.
 
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42 said:
There's possibly a psychological thing going on. Similar with normal income tax, whereby someone on PAYE doesn't mind paying it as it comes off at source & don't notice it as they've never had it. Whereas someone self employed who actually has to pay it over themselves is more likely to try & pay less.

In not entirely sure of how it works with inheritance tax, but does sound like it's the recipient having to pay the bill, after they've received it. So would it not be better for it to be just taken from the estate first before it's paid over?
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It is.
 
Kent_Mackem said:
Why though? They're gaining a massive freebie. They could always sell the house and buy a smaller one.

Youngster A: Parents die and leave next to nowt. Just crack on son... you'll have to find your own way through life.
Youngster B: Parents die and leave a £1 million house, which Youngster B then sells, pays whatever IHT is due and walks away 700 large in cash (or whatever it is) which he didn't earn himself. He's won the lottery.

Youngster B is still far better off just because he had wealthy parents. I think it is tacky for him to complain about his situation.

Also, I don't think tax laws should have caveats giving those who live in any specific region special exceptions. The investment that London and the SE gets is already way higher than that of the NW and NE for example.
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I do see your point but levying the same tax on IHT regardless of property value when it is the sole residence of a relative minor seems harsh.

It was awful for the boy losing his father like that and being faced with all the legal stuff, getting his father's body back and losing his childhood home and having to move away all when he was about to start Uni.
 
Harry Angstrom said:
The recipient gets the net of the estate. the tax is paid out of the estate.
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Yes, but I'm talking about the psychological attachment to money of having to actually pay it over yourself v someone else doing it before you get your hands on anything. It's a similar argument that the cash is king lot argue about budgeting & how easy it is to spend when you're not physically handling money.
 
42 said:
Yes, but I'm talking about the psychological attachment to money of having to actually pay it over yourself v someone else doing it before you get your hands on anything. It's a similar argument that the cash is king lot argue about budgeting & how easy it is to spend when you're not physically handling money.
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But the beneficiaries only get bequests net of tax
 
Kent_Mackem said:
Why though? They're gaining a massive freebie. They could always sell the house and buy a smaller one.

Youngster A: Parents die and leave next to nowt. Just crack on son... you'll have to find your own way through life.
Youngster B: Parents die and leave a £1 million house, which Youngster B then sells, pays whatever IHT is due and walks away 700 large in cash (or whatever it is) which he didn't earn himself. He's won the lottery.

Youngster B is still far better off just because he had wealthy parents. I think it is tacky for him to complain about his situation.

Also, I don't think tax laws should have caveats giving those who live in any specific region special exceptions. The investment that London and the SE gets is already way higher than that of the NW and NE for example.
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If Youngster B has 2 or 3 siblings then £700k split between them isnt going to allow any of them to buy.

Maybe instead of a threshold on the size of the estate IHT should be calculated on a maximum inheritance per recipient.
 
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Darlo1973 said:
If Youngster B has 2 or 3 siblings then £700k split between them isnt going to allow any of them to buy.
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Pretty nice deposit!
Darlo1973 said:
Maybe instead of a threshold on the size of the estate IHT should be calculated on a maximum inheritance per recipient.
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That would be easy got around.
It is pretty OK at the moment, some loopholes could be got rid of (not sure what they are as I'm not a billionaire).
We need a tax take, and I think IHT is OK with just a bit of tweaking needed - see my earlier post today, #35
 
Darlo1973 said:
If Youngster B has 2 or 3 siblings then £700k split between them isnt going to allow any of them to buy.

Maybe instead of a threshold on the size of the estate IHT should be calculated on a maximum inheritance per recipient.
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You’re assuming the will stated equal shares of the nett estate in the first place.
 
CatRyan said:
I do see your point but levying the same tax on IHT regardless of property value when it is the sole residence of a relative minor seems harsh.

It was awful for the boy losing his father like that and being faced with all the legal stuff, getting his father's body back and losing his childhood home and having to move away all when he was about to start Uni.
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I agree entirely that it is harsh and horrible for the boy. But that's life unfortunately. Crap things happen.

Darlo1973 said:
If Youngster B has 2 or 3 siblings then £700k split between them isnt going to allow any of them to buy.

Maybe instead of a threshold on the size of the estate IHT should be calculated on a maximum inheritance per recipient.
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That is another way of looking at it, yes.

Alternatively, those lucky enough to get freebies from parents could instead maybe just be grateful for what they do receive and accept that, over a certain value threshold, there is a tax liability (that as discussed earlier can often easily be brushed away anyway with tax avoidance advice).

Complaining about an inheritance freebie really is looking a gift horse in the mouth and is a proper tacky and vulgar entitled attitude to those poor sods who aren’t as privileged.

Paying too much tax is a nice problem to have. I’d happily swap with those terribly unfortunate souls who have to pay “too much” tax. 😀
 
Kent_Mackem said:
I agree entirely that it is harsh and horrible for the boy. But that's life unfortunately. Crap things happen.


That is another way of looking at it, yes.

Alternatively, those lucky enough to get freebies from parents could instead maybe just be grateful for what they do receive and accept that, over a certain value threshold, there is a tax liability (that as discussed earlier can often easily be brushed away anyway with tax avoidance advice).

Complaining about an inheritance freebie really is looking a gift horse in the mouth and is a proper tacky and vulgar entitled attitude to those poor sods who aren’t as privileged.

Paying too much tax is a nice problem to have. I’d happily swap with those terribly unfortunate souls who have to pay “too much” tax. 😀
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Classifying losing your closest family members as a "freebie" is pretty classless and vulgar, mind. Working hard for the benefit of your family should be encouraged, not penalised.
Darlo1973 said:
If Youngster B has 2 or 3 siblings then £700k split between them isnt going to allow any of them to buy.

Maybe instead of a threshold on the size of the estate IHT should be calculated on a maximum inheritance per recipient.
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That would make more sense. It's interesting to see who views it as a "freebie" versus it being a tax on dying. It is calculated in a way that can only classify it as a death tax. Not surprisingly, a lot of people aren't too keen on that.
 
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Lonz said:
Classifying losing your closest family members as a "freebie" is pretty classless and vulgar, mind. Working hard for the benefit of your family should be encouraged, not penalised.

That would make more sense. It's interesting to see who views it as a "freebie" versus it being a tax on dying. It is calculated in a way that can only classify it as a death tax. Not surprisingly, a lot of people aren't too keen on that.
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It is a freebie though. The gain of the money is entirely separate to the loss of the family member. It is possible to feel empathy and sadness when hearing somebody has lost a parent at the same time as not being blind to how it looks when people twist on about paying tax on a freebie.

Often the deceased are very old anyway and that is the natural way of things.

It would be a death tax if the person dying paid that tax. They don't... because they are dead. The freebie is taxed because it is received money that over a particular threshold is taxable (but only on the amount above the considerably high threshold).
 
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Kent_Mackem said:
It is a freebie though. The gain of the money is entirely separate to the loss of the family member. It is possible to feel empathy and sadness when hearing somebody has lost a parent at the same time as not being blind to how it looks when people twist on about paying tax on a freebie.

Often the deceased are very old anyway and that is the natural way of things.
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The "gain of money" through inheritance is completely tied to the loss of a family member, otherwise it wouldn't be an inheritance.

We should be encouraging people to do well for themselves so they can leave something behind to their family.
 
Lonz said:
The "gain of money" through inheritance is completely tied to the loss of a family member, otherwise it wouldn't be an inheritance.

We should be encouraging people to do well for themselves so they can leave something behind to their family.
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In many cases the best part of a million pounds is passed on tax free. And you get 60% of anything above that. That is not too shonky.
 
peachy said:
In many cases the best part of a million pounds is passed on tax free. And you get 60% of anything above that. That is not too shonky.
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My family should get 100% of what I've got left when I snuff it. Those with the highest amounts of wealth can and will be ensuring that is the case for theirs.
 
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