Inheritance Tax Penalty: who pays?

[Lonz]

You'll be dead, if it somehow isn't paid you won't be chased for it.

The money will be chased after regardless.

 

[42]

You are reading things that aren't there.

IHT is anti-family and the current thresholds and rates are arbitrary. 40% on whatever's left if you get hit by a bus or killed by a short illness is very, very heavy. I think building some wealth to secure your family's future (and therefore less likely to be a burden on the state) is a noble venture that should be incentivised, not penalised. The current rules in this country do not do that for anyone but the very, very wealthy.

Would you rather pay either a small % on inheritance or a as is now a larger % over a large tax free lumper

OR

Take a 50/50 chance of getting it all or nothing, as you could lose it all in care fees?

 

[Lonz]

Would you rather pay either a small % on inheritance or a as is now a larger % over a large tax free lumper

OR

Take a 50/50 chance of getting it all or nothing, as you could lose it all in care fees?

If I’ve understood you correctly, the second one.

 

[Kent_Mackem]

Because that’s where I want my money to go when I’m gone. The state hasn’t earned it either, so why should they be entitled to 40%?

You've paid your tax on it as you earned it though, as per the law.

The recipient(s) of your swag once you die, no matter how much you love them and want to have it, hasn't paid the tax on that money. It's a freebie which under our law is taxable above a particular threshold, which is canny high anyway. They'd only pay tax on the excess and get the rest tax-free anyway.

So you may as well ask why the state is entitled to its income tax on your salary.

 

[Lonz]

You've paid your tax on it as you earned it though, as per the law.

The recipient(s) of your swag once you die, no matter how much you love them and want to have it, hasn't paid the tax on that money. It's a freebie which under our law is taxable above a particular threshold, which is canny high anyway. They'd only pay tax on the excess and get the rest tax-free anyway.

So you may as well ask why the state is entitled to its income tax on your salary.

Yes, it would be a gift to my family. We do not tax gifts in any other circumstances than IHT.

The difference between my estate being taxed versus my income, is that the estate will have already been heavily taxed at the 45% additional rate, and all that has happened is I've snuffed it. We may as well have a tax on birthdays at that point.

If we are going to claim that IHT is paid by the beneficiaries, then the calculations should be done on the basis of what's received by each individual, not on what's left behind by the dead person.

 

[UpTheDuff]

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.

They can. They can leave lots. With no tax on £325k and if the house is the main residence then an extra £175k tax free as well.

If there are two parents who both die the tax-free amount is £1m. For a single parent it is £500,000. This made up of the existing £325,000 threshold per person and an extra main residence relief of £175,000.

 

[Lonz]

They can. They can leave lots. With no tax on £325k and if the house is the main residence then an extra £175k tax free as well.

If there are two parents who both die the tax-free amount is £1m. For a single parent it is £500,000. This made up of the existing £325,000 threshold per person and an extra main residence relief of £175,000.

We should be allowed to leave as much as we wish. We would do that when we’re alive, so no need for the state to take another slice just because we’ve died.

 

[Kent_Mackem]

Yes, it would be a gift to my family. We do not tax gifts in any other circumstances than IHT.

The difference between my estate being taxed versus my income, is that the estate will have already been heavily taxed at the 45% additional rate, and all that has happened is I've snuffed it. We may as well have a tax on birthdays at that point.

If we are going to claim that IHT is paid by the beneficiaries, then the calculations should be done on the basis of what's received by each individual, not on what's left behind by the dead person.

I still can’t see why you are against it.

Your kid(s) will be getting a freebie. Lucky them. Plenty don’t. They didn’t earn it, you did. There is a sizeable chunk that they get tax-free and that apparently still isn’t good enough.

When somebody gets a freebie there ought to be a tax liability on it. There is a high threshold, to make sure extremely wealthy families don’t keep all of the money. Although I admit the system is flawed as the tax can be avoided often. I really don’t see the issue. I wouldn’t look a gift horse in tbe mouth if I received a freebie. I’d be grateful. But I suppose we are never going to agree and have exhausted the conversation.

 

[Lonz]

I still can’t see why you are against it.

Your kid(s) will be getting a freebie. Lucky them. Plenty don’t. They didn’t earn it, you did. There is a sizeable chunk that they get tax-free and that apparently still isn’t good enough.

When somebody gets a freebie there ought to be a tax liability on it. There is a high threshold, to make sure extremely wealthy families don’t keep all of the money. Although I admit the system is flawed as the tax can be avoided often. I really don’t see the issue. I wouldn’t look a gift horse in tbe mouth if I received a freebie. I’d be grateful. But I suppose we are never going to agree and have exhausted the conversation.

It isn't just luck though. It's through the work I'll have put in, not the state, and me choosing to give it to them. There is no good reason for the state to step in here other than "just 'cos it can". This is after the state has had more than a fair share of my labour by that point, and on what's left of a person's entire life's work.

If you are unhappy with your family not leaving much behind for you, the only real difference you can make is to make sure you leave something behind to your own. As things are now, that sort of thing isn't incentivized; it's penalised. I cannot get my head around anyone thinking the state needs to take a slice of any gift you give to your own children.

 

[sponge]

Can you confirm how much YOU paid ?

No, can you confirm your financial status

 

[Kent_Mackem]

It isn't just luck though. It's through the work I'll have put in, not the state, and me choosing to give it to them. There is no good reason for the state to step in here other than "just 'cos it can". This is after the state has had more than a fair share of my labour by that point, and on what's left of a person's entire life's work.

If you are unhappy with your family not leaving much behind for you, the only real difference you can make is to make sure you leave something behind to your own. As things are now, that sort of thing isn't incentivized; it's penalised. I cannot get my head around anyone thinking the state needs to take a slice of any gift you give to your own children.

At the risk of repeating myself

The recipients haven’t earned it. It is a freebie. It is a fair system for an amount of it to be taxable.

I’m not unhappy with me not getting a freebie from my parents. I’ve worked hard to earn my own money same as you did. I’d have no issues if none of what’s left got to my kids when I die. I’m concentrating more on bringing them up with a decent set of values and ensuring they don’t twist on about a bit of tax being paid on freebies

The law is in place to try to stop vast amounts of wealth being collected and passed down the generations in families of Old Money - the aristocracy and the like.

I think that is a fair system. The threshold is high so your kid(s) would receive a sizeable freebie without having to worry about the tax. The tax is only on the amount above the threshold.

Paying too much tax really is a First World problem and it’s tacky to hear complaints about it. Loads of people world love to wake up one morning and suddenly have that “problem”.

 

[Harry Angstrom]

At the risk of repeating myself

The recipients haven’t earned it. It is a freebie. It is a fair system for an amount of it to be taxable.

I’m not unhappy with me not getting a freebie from my parents. I’ve worked hard to earn my own money same as you did. I’d have no issues if none of what’s left got to my kids when I die. I’m concentrating more on bringing them up with a decent set of values and ensuring they don’t twist on about a bit of tax being paid on freebies

The law is in place to try to stop vast amounts of wealth being collected and passed down the generations in families of Old Money - the aristocracy and the like.

I think that is a fair system. The threshold is high so your kid(s) would receive a sizeable freebie without having to worry about the tax. The tax is only on the amount above the threshold.

Paying too much tax really is a First World problem and it’s tacky to hear complaints about it. Loads of people world love to wake up one morning and suddenly have that “problem”.

At risk of repeating myself the law is unfit for purpose and is a tax on the uninformed or the unlucky. No one with a bit of planning need pay it. Why would anyone be happy to give to the exchequer money they don’t have to?

 

[Longcount]

At risk of repeating myself the law is unfit for purpose and is a tax on the uninformed or the unlucky. No one with a bit of planning need pay it. Why would anyone be happy to give to the exchequer money they don’t have to?

I've posted that I would within the last couple of pages. Used tax avoidance to accumulate, helping massively. Feel a wider societal duty than to make sure my beneficiaries don't feel like a chunk of their gift has been snatched, so not fussed about being taxed and supporting the country once I'm gone.

 

[Harry Angstrom]

I've posted that I would within the last couple of pages. Used tax avoidance to accumulate, helping massively. Feel a wider societal duty than to make sure my beneficiaries don't feel like a chunk of their gift has been snatched, so not fussed about being taxed and supporting the country once I'm gone.

How much is your expected IHT bill? If I wanted to put something back, I’d make sure I’d gifted enough and then bequeath the tax band to my beneficiaries and then give the balance to Charity. I think your approach is daft.

 

[Longcount]

How much is your expected IHT bill? If I wanted to put something back, I’d make sure I’d gifted enough and then bequeath the tax band to my beneficiaries and then give the balance to Charity. I think your approach is daft.

Already make fairly sizable recurring charity contributions. Will likely make bigger ones as I get closer to death.

You may think it's daft, but the concept of wealth that has benefited massively from tax avoidance being taxed to support services when I'm gone is just a difference in morality imo. I highly doubt I'll be making any conscious moves to avoid it.

 

[Kent_Mackem]

At risk of repeating myself the law is unfit for purpose and is a tax on the uninformed or the unlucky. No one with a bit of planning need pay it. Why would anyone be happy to give to the exchequer money they don’t have to?

I've acknowledged that several times, but you could argue the same about the law on speeding. I'm sure far more motorists exceed the speed limit and get away with it than people who cheat the IHT system and get away with it. I think the system should be in place and it should be enforced correctly. The tax threshold on a freebie is large. In certain areas and in certain functions this country is absolutely on its knees. The exchequer desperately needs money to share out where it is needed. But instead it seems that you are arguing that wealthy people should be encouraged to keep their money tight to their chests to make the polarisation larger per generation.

 

[Harry Angstrom]

Already make fairly sizable recurring charity contributions. Will likely make bigger ones as I get closer to death.

You may think it's daft, but the concept of wealth that has benefited massively from tax avoidance being taxed to support services when I'm gone is just a difference in morality imo. I highly doubt I'll be making any conscious moves to avoid it.

You can put a large donation to charity in your will. Then no IHT is due on the bequest. I do think your stance is daft. There is no moral capital in paying tax when you don’t have to. Some people want to leave a legacy to their children and grandchildren. That isn’t a bad thing is it?

I've acknowledged that several times, but you could argue the same about the law on speeding. I'm sure far more motorists exceed the speed limit and get away with it than people who cheat the IHT system and get away with it. I think the system should be in place and it should be enforced correctly. The tax threshold on a freebie is large. In certain areas and in certain functions this country is absolutely on its knees. The exchequer desperately needs money to share out where it is needed. But instead it seems that you are arguing that wealthy people should be encouraged to keep their money tight to their chests to make the polarisation larger per generation.

They aren’t cheating. They are driving under 70mph. I agree that wealth should be taxed but IHT isn’t fit for purpose. No matter how many times you accuse people of cheating when they aren’t, it is a tax on uninformed and unlucky.

 

[Longcount]

You can put a large donation to charity in your will. Then no IHT is due on the bequest. I do think your stance is daft. There is no moral capital in paying tax when you don’t have to. Some people want to leave a legacy to their children and grandchildren. That isn’t a bad thing is it?

You're welcome to think it's daft. Like I say, I see it as more a difference in morality, it's not something I'll be getting 'caught out on' through negligence. My beneficiaries will receive a sizeable legacy, of which, sizable chunks will be the direct result of tax avoidance schemes allowing wealth to compound massively.

I didn't say it's a bad thing, did I? Like I say, it's just a difference in opinion/perspective on where people want their money to go. I just happen to be less fussed that a chunk will go back to supporting wider society.

 

[Harry Angstrom]

You're welcome to think it's daft. Like I say, I see it as more a difference in morality, it's not something I'll be getting 'caught out on' through negligence. My beneficiaries will receive a sizeable legacy, of which, sizable chunks will be the direct result of tax avoidance schemes allowing wealth to compound massively.

I didn't say it's a bad thing, did I? Like I say, it's just a difference in opinion/perspective on where people want their money to go. I just happen to be less fussed that a chunk will go back to supporting wider society.

What are morals? Surely that’s good and bad. Is this a theoretical issue or is there a likelihood your estate will have substantial IHT to pay?

 

[Longcount]

What are morals? Surely that’s good and bad. Is this a theoretical issue or is there a likelihood your estate will have substantial IHT to pay?

Morality would refer to ones principles and values. Just because I believe something, doesn't mean those who believe differently are inherently bad.

There's a very high likelihood, yes. Otherwise, I wouldn't bother saying what I intend to do, as it's often easy to say what you'd plan to do with what is never likely to be reality.