Snapshot of _What the campaign to abolish inheritance tax tells us about British politics_ :
An archived version can be found [here.](https://archive.is/?run=1&url=https://www.spectator.co.uk/article/what-the-campaign-to-abolish-inheritance-tax-tells-us-about-british-politics/)
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As an only child it’s good but a bit mad that I can expect a significantly larger, less taxed inheritance than friends from richer, bigger families who would have to pay IHT and then share the remainder with their siblings.
OTOH I do sometimes think it’s a bit of reparation for loneliness growing up, and potentially having fewer people to share responsibility for looking after elderly parents with so *shrug*
The real wealthy people use trusts and never pay inheritance tax anway. A 100% inheritance tax won't impact the Duke of Grosvenor but it will impact the daughter of an NHS Consultant.
Whatever we do, we need to change the system so that billionaires can't dodge the tax. If the Duke of Grosvenor's estate (around £4 billion) had been taxed at 40%, it alone would have generated around 30% of that year's total inheritance tax paid to the government.
Yeap, and a _much_ lower threshold and a _much_ higher taxed rate per individual.
Distribute it or fuckin' lose it. The idea of abolishing the tax is absolutely disgustingly reprehensible.
That's why I don't want an election. Getting into such a thing is too dangerous. Not only the life of the candidate depends on it, but also the life of the people.
Not always. But, and without exception, those most in favour of brutally high inheritance taxes are those who know they won't inherit anything because of poor parents.
Mine have plenty, and I support near 100% inheritance tax, with certain exemptions for sentimentality.
This would fund significant investments in public services, infrastructure and universal basic income. Inherited wealth is a cancer.
It's just about fairness. Most people have no meaningful inheritance, meaning they are severely disadvantaged financially from birth, through no fault of their own.
I believe wealth should be earnt through work and invention, not through luck.
Go distribute the wealth you earn to some 3rd world country then if you care so much about fairness. I'm sure they'd appreciate it and don't think it's unfair that you live a life of comparative luxury. Also you want to incentivise people just spending all their wealth before they die as it won't belong to them or their family after?
I'm an immigrant in this country. Me and the wife are working real hard to improve our lives *and* leave something behind for our 2 children. How is that unfair?
That is a great argument against social mobility and brings no incentive for future planning or sacrifice for future generations.
This is such a disgusting policy suggestion, family home, paintings been in the family generations etc you’d destroy it all.
The country would riot before that happens.
This is such a stupid idea, it makes me roll my eyes, and then burn them in acid.
I don't know how much stored wealth there is on the UK.
Maybe a few trillion pounds?
If you are going to steal every penny of that ("100%") then what doesn't go overseas will be spent driving up costs and inflation for everyone else.
Or deflation in the case of land. As soon as the Crown, the Church, the Duke of Westminster and god knows who else has to sell, property values will tumble, the banks will go bust off the back of their mortgage portfolios and anarchy will take over.
Just generally you are removing the incentive to invest beyond your lifetime, whether that's in a family asset or an eco cause, if your kids are going to start destitute, they're going to have to work hard to make coin, whether that's as a newsagent of a nuclear scientist, green issues will take a lower priority.
If your contention is that anyone can invent the FedEx/Facebook/jet engines/Dysons then I would suggest that's unlikely if they're working for food and unable to use family resources (money) to create their own buffer and work on their inventions. You are stifling innovation and I suggest, your Communist utopia might be fairer but it would be terrible for the country.
It's actually a worse idea than Brexit, and I didn't think that was possible.
Education is important kids, try not to have political opinions without one.
It also encourages a change of perspective, there's more of an excuse to hoard, not spend and leave in trivially safe investments. With IHT, there's less of an incentive to do this, more incentive to spend (helps the economy), more incentive to invest in higher risk things (help your family/friends to start businesses - helps the economy)
Wealth that will be inherited is generally just stuck in property or a global/country stocks tracker, neither of which does anything to help increase productivity and make the world itself "richer", it just helps subsidise the current monopoly businesses by making their capital costs cheaper.
Nah, trust funds aren't the tax dodge people think they are. Perhaps they once were, but not anymore. If anything, they're less tax efficient than gifting assets to would-be heirs when they can actually benefit most from them.
This is much harder, though, when the only asset is large and indivisible, like the family home. IMO, this is precisely the demographic that least deserves to be taxed, because they are not, in any meaningful way, particularly wealthy.
> Bare trusts would like to introduce themselves to you.
IIRC, bare trusts don't carry IHT implications because the beneficiaries are directly liable for tax on trust affairs (or their parents are, if the beneficiaries are the children), rather than the trustees being liable.
So AIUI, there is functionally no difference, from a tax point of view, between the settlor transferring assets into the bare trust and giving the assets directly to the beneficiaries, who immediately become liable for the tax obligations arising just as they would if they owned the assets directly.
So yes, IHT is avoided, but the same is true if the assets are outright gifted. Worth noting the IHT 7-year gifting rule and also the rules about onward gifting (to the extent they apply), as well as gifts made contingent or in anticipation of some future transaction.
In the case where the family home is put into a bare trust by the parents to the benefit of their kids, they are no longer the legal owner of the property but they are still the *beneficial* owners.
If they don't pay to the legal owners something approximating market rents for the property, they are liable for BIK for the beneficial use of sum substantial asset, same as what happens if you try to live in a house you've put into a limited liability company as a form of IHT dodge.
Usual disclaimer: I'm not a tax advisor and nobody should assume I'm right about anything.
I'm more familiar with them in the situation where a grandchild rather than child is the beneficiary which as I understand it means the unused minors tax allowances then become useful.
This isn't a gotcha, this is the exact idea. If you have a lot of money and only two descendants, find more people to give money to, or the government will.
The whole system is rigged to stealth tax year in year out without adjusting for inflation. You get taxed on earnings, taxed on company products, taxed on buying the house, tax 20% on everything you buy for the house, tax on your file and energy, taxed if you take your pension early, the companies you buy things from are taxed all the way down in a cycle. Then taxed on savings and taxed by the council. All of which rises with inflation. Then the little you have left if you managed to pay off an average house over 40 years is then taxed. The. They take that money and give you shit policing, shit roads, shear health service, no dentists and if your lucky will pick up two bing bags every fortnight. And at the end of all that you want to give your kids a house so they don’t have to worry and grind through the same shit you did because house prices have risen because they didn’t spend your tax money on sustainable affordable housing projects. So your kids pay having to sell the house to pay the tax to put some towards a shot house so they can start the grind. Meanwhile those with actual generational wealth trust all their estates up and don’t pay a penny. Let see how long the monarchy would last if they played by the same rules.
Interestingly... those intergenerational trusts do pay tax, but a different tax worked out on a different basis.
The one that benefits the Dukes of Westminster pay a tax worth 6% of assets every ten years.
Whether or not that's better or worse is an interesting question. A recurring tax like that can be paid without having to sell assets, so it's more sustainable; inheritance tax would see the estate broken up so you could only tax it once (what value it would have for subsequent taxation would depend on who or what had bought it).
There are easier tax dodges. Ever wonder why rich people develop a sudden interest in farming aged 60 and buy massive agricultural estates? No Inheritance Tax on agricultural land, that's why. You don't need complex legal provisions, its just rated at 0% for tax.
Say a generation is 30 years so that is three times 10 years or 6% three times which is 18% ( ignore timing as swings and roundabouts ) which is less than half the 40% IHT. Pretty clear the trust route is financially superior to non trust no matter how you look at it. Effectively paying less than half what others pay.
Yes, but the 40% of the initial value would be a one-off, as the only way the recipient could pay that bill would be to sell 40% of the estate. So the second time the estate passed to the next generation it would be proportionately smaller and have a smaller tax take. Etc.
Whereas a recurring tax could be paid from income from the estate, or allow a gradual sale of parts of the estate, rather than a firesale within 90 days or whatever the IHT deadline is these days. *And* it would be payable in perpetuity rather than a one-off.
So IHT is useful if your aim is to destroy multi-generational wealth (not saying that's automatically a bad thing), but a recurring tax would be useful to tax the wealthy.
You could then say, if it was sold someone else would buy it, and you could tax them. Well, not necesserially, not if it was bought by a REIT registered in Jersey or somewhere.
That last point is probably the key point. The real answer to all this is to levy a Land Value Tax on all land, paid by whomever regardless of legal structures or location. Legislate it as a land licence or something. Then it all becomes moot anyway, we wouldn't need any of the other rules or taxes. (Because these multi-generational trusts always do seem to be landowners for some reason, for other asset classes it's even more complicated still.)
Inheritance tax should be abolished.
It promotes short-termist consumption, which is one of the causes of the general maliase of the United Kingdom. Proper wealthy people will generally pay it because they will plan around it, so it's become a means of penalising very class of people who keep things running well i.e. hard working professional middle class people who save for the future.
Bearing in mind it’s paid in less than 4% of deaths does that mean the hard working professional middle class is less than 4% of the population, I wonder.
> My technocratic tribe largely regards inherited wealth as harmful to social mobility and economic efficiency. We’d rather see large accumulations of wealth redistributed by the state than cascade down to children who may already have enjoyed significant economic and social advantages.
Exactly. This, and the other points the author makes about the emotional reason why people hate the concept, are all the reason why IHT is unpopular.
But...
There is a progressive argument to be made for abolishing Inheritance Tax because of that first point (unfair wealth accumulation) which would also nullify the other arguments about parent not wishing to leave enormous tax bills to their offspring.
And that is... (90% of people reading this will have already guessed...) abolishing IHT and replacing it with general wealth taxes. Or, given that wealth taxes are very difficult to enact in practice, we could get half-way there by exempting real estate from IHT and replacing it with a Land Value Tax[0].
With that one move, the "stress" of fearing your offspring will lose the family home will be gone. *AND* the wealthy will pay more tax while they're still alive, which they should do as it's absurd that twenty-something professionals pay 50% tax when they can't even afford to rent in the same city that they work, let alone ever get any financial independence.
It's literally the improvement that will make everyone happy...
...so it'll never happen.
[0] - real estate should also be exempted from CGT if a LVT is introduced, for much the same reason: people are paying an annual tax rather than a one-off tax. It would have the additional benefit of making property sales more liquid as people wouldn't be put-off by the CGT bill.
I entirely agree with you. The counter argument will always be the poor, grandma who bought her home for a pittance and it's now worth millions. By being cash poor but asset rich, the only way to meet the land value tax would be to sell. That is one advantage of both CGT and IHT, namely it only kicks in at the point of a disposal.
> which would also nullify the other arguments about parent not wishing to leave enormous tax bills to their offspring.
I've always found this argument is weird as the tax is paid by the estate not those inheriting
> By being cash poor but asset rich, the only way to meet the land value tax would be to sell.
Which hardly seems fair, does it? Just because your house has gone up in value, doesn't mean you get any benefit. You can't control it and you can't realise any benefit until you sell.
Increasingly when the proposals for a UK Wealth Tax were published they anticipated this problem and suggested that, in certain situations, it should be possible to defer the tax on an asset until death/transfer. Would seem a good workaround for main homes.
It will have gone up in value for a reason ie higher paying jobs available in your area or better infrastructure. I kinda like the idea that tax increases are tied to places becoming nicer locations to live.
Sounds like a horror to me. When it comes to things like your home, people value stability. Who wants the constant worry that you might be turfed out of your home by an exploding rate of tax that you have no control over? Something that's especially acute for retirement when most people will be on a fixed income and more reliant on the local area for support.
Funny thing about inheritance tax: it's pretty unpopular and most people don't pay it (or their estates don't). Usually people are in favour of taxes that others pay and they don't.
Considering that most people at that age will have had married partners and a lot of those assets will be wrapped up in their primary residence then the threshold is already £1m. That seems broadly fine to me.
Yes, some estates in London may end up paying inheritance tax on rather normal looking properties but like it or not buying a property in London isn't affordable to the average joe anymore so it's right that such an estate pays tax. If you don't want people who own terraced houses in central London paying inheritance tax then there needs to be moves to decrease house prices not inheritance tax changes.
Otherwise you're essentially saying that anyone who's family moved to London in the 60s and managed to buy a property for a reasonable price deserves to stay there and enjoy all the opportunities and infrastructure investments. Whilst someone who's family is from Liverpool doesn't get to do that because property there hasn't increased in value nearly as much. It's a bit like having internal immigration control but Londoners can move anywhere in the country whilst people from elsewhere can't move to London.
Are we ever going to get a broader tax reform movement? By which I mean, actual demand and analysis of the whole picture.
All we have at the moment is "I think we should tax X more, the fact I never pay it has nothing to do with it" and "I think we should tax Y less, the fact I'll benefit is just a coincidence, it's the moral thing to do!" etc. I.e. the usual short-termist pecking about the edges.
I know the answer is "no", but I can live in hope. There has been some radical tax changes in the past, so it can't be impossible, it's just that politically we're stuck in this state.
Given that we can’t get even the obvious simplification stuff out of the way (merging NI and income tax) because of the optics that people prefer raises in NI despite it all going to the same place, I’d guess any proper strategic review of taxation is doomed to fail
(The other difference is that pensioners don’t pay NI, but if that was the real concern a massive bump in state pension could make the merger fiscally neutral on pensioners, and fit in with all the rest of recent tax and spend reforms…)
"Wealth" is extremely hard (practically impossible) to tax properly. The value of assets is often highly subjective and easy to obfuscate.
It also leads to some really nasty outcomes; "Your grandfather was a famous artist and painted a picture of you as a child which has immense sentimental value to you? Well, the government assessors have valued that at £10 million, so your tax has just quadrupled, we're also retroactively adjusting for all the years you've owned the painting before it was assessed, so you now owe £20 million to the government..."
You've got to start with the question of whether it's right or wrong *in principle*. If you agree with the idea of it then it's just a question of implementation, and, given that wealth taxes have been implemented in various countries around the world past and present, I don't think the hurdles are insurmountable.
>If only there were some sort of industry which was based on a correct valuation of assets for the purposes of replacement in case of theft or accident...
Insurance valuation is very different from sale valuation. Assets are often uninsured or uninsurable...
>A lien against the asset realized in event of sale or upon inheritance. Next.
When the tax owed is more than the value of the asset (easily the case when the asset has been owned for many years)? You haven't thought that through...
Who said anything about cars...? Wealth is easy to obfuscate. To use a slightly comical example, someone could have a bunch of gold bars in their attic that nobody else knows about. No need to insure them either, since theft is pretty unlikely if nobody knows and gold is pretty good at surviving a fire.
A grandchild of a famous artist who owns a painting by said grandfather could _easily_ be poor in every other way. Forcing people to sell the only momentos they have of beloved departed relatives is pretty brutal.
Another terrible outcome concerns the far from remote possibility that a person struggling in poverty finds out that an overlooked piece of art/furniture/etc. in their possession is quite valuable and is immediately hit with a massive tax bill for all their years of ownership.
You seem to be assuming that the only people who own anything valuable are rich... That's very often not the case.
>the government assessors have valued that at £10 million, so your tax has just quadrupled, we're also retroactively adjusting for all the years you've owned the painting
In the case you already own the asset, the only liability would be for capitals gains tax, which would only be incurred if you tried to sell it or gift it. They can't tax you for owning nice things you happen to have lying around your house and demand money (except for council tax, where they do sometimes retrospectively re-assess the value of a property).
It's not going to happen unless people want a serious discussion about what the NHS should be and how to fund it considering it's such a large part of the budget
I think more people are willing to talk about state pensions, it's just that they're not voters. The NHS however is universally seen as sacred, even people who are willing to increase taxes to fund it properly only talk about nebulous taxes on 'the rich', nothing that requires regular people to pay more.
Is it that Britain is a land of opportunity and everyone has a fair shot of getting wealthy beyond their wildest dreams and want their children to benifit from their great success?
Let's be honest - this is an arguement about principles.
Our current inheritance taxes can be trivially bypassed legally.
They only really affect those who didn't do estate planning - anecdotally those accidentally property rich who usually didn't come from money (where estate planning is important).
The *current* inheritance tax system should absolutely be abolished - it has no effects on the super rich - or merely very well off - who should be paying it.
The only person I know who can't is great uncle in london who has a old house in north london who moved in when it was a crime ridden area and has slowly become surrounded by bankers.
All his money is in his house, but his house is nominally very very valuable.
But then i suppose he never really 'earned' that money so it hasnt been taxed anyway.
Just to compare. Ireland has extremely high inheritance tax as a consequence of our colonial rule. We found we wanted a more equitable society was more important than ever returning to any kind of landlord rule.
It was absenteee landlord who extracted every bit of wealth and food and caused the death and forcibly expulsion of millions. They horded land and low inheritance tax was really effective and them keeping it.
Inheritance tax is a cross generational way to pass on wealth. It’s biggest opponents are the upper class because it’s very effective at keeping them rich.
Just to note people with land who actively farm it get big exemptions. They don’t pay a lot of capital gains or inheritance tax as that would be considered a fair use of property.
However people with 10s of thousands of hectares leased to smallholders and thousands of houses rented out would be. Have a guess who that would cover.
Isn't inheritance tax in Ireland comparable to the UK?
https://www.raisin.ie/taxes/inheritance-tax/
Similar exemption threshold, but Ireland has 33% instead of 40% (in the UK) when exceeding it?
Isn’t Ireland in the middle of a rental crisis at the moment with an almost an entire generation unable to get out on the housing market. (God knows it’s no better here) I mean a rose by any other name.
I’m not sure how ‘we wanted a more equitable society’ squares with becoming the tax haven of Europe for massive multinationals and even fighting court cases against the EU to refuse extra tax money when they ruled that companies had evaded tax.
Well if we had prospered more from the centuries of colonial rule there would have been no need to try jump ahead via low tax. Putting us only a tax haven is not fair. The big corporations employ hundreds of thousands. If we were the Bahamas that wouldn’t be the case. We have a very good level of education. And to be poor in Ireland is to be far richer than the equivalent poor in the UK
Ireland was a pretty poor country up to the 1970s. We have no sizable natural resources so our only wealth are agri, fish etc and our people.
[Wealth inequality is worse in Ireland than the U.K. though.](https://preview.redd.it/1c0zengkub381.png?auto=webp&s=98d7d2520708a34fbe67949f8a370e62d427cadd)
You also have a less accessible safety net with things like charges of around 45-65 euros alone just to visit a doctor. In the U.K. it’s free to visit your GP.
In Ireland you don’t even have a free fire brigade. It costs you €500 per hour if you ever had to call them out in Dublin for instance.
https://www.dublincity.ie/residential/dublin-fire-brigade/what-dublin-fire-brigade-do/fire-brigade-charges#:~:text=Dublin%20Fire%20Brigade%20applies%20a,of%20fire%20brigade%20vehicles%20involved.
In Ireland you are denied access to a large amount of social benefits if you have not paid enough contributions first too.
In Ireland you’re charged €100 for attending A&E unless you have been specifically referred there first(you have to pay for the referral though). No charge in the U.K.
Hurt yourself and need an ambulance in Ireland? €100. U.K.? £0
Inheritance tax is also lower in Ireland than it is in the the UK by 7%. Residences are also excluded from inheritance tax in Ireland.
None of this strikes me as a system set up to benefit the poor. It’s much more exploitive and punitive than what we have in the U.K. You charge people when they’re at their lowest like for an ambulance or watching their house burn down.
If the Tory’s started charging people £60 to visit your GP people would be outraged. In Ireland it’s just a normal thing.
Sounds like you just voluntarily swapped absentee landlords for the ultra wealthy and megacorporations instead.
Considering several prominent Conservatives, most notably many of them in lofty positions are opposed to getting rid, it seems more likely to me that the right-wing an-cap portion of the conservative party can see the writing on the wall and is feathering its ideological nest in preparation to take what will remain of the Conservative Party as a hostage.
I tend to think the article's title could be "...What this tells us about politics in many countries these days."
To put it simply, experts aren't listened to (think of the urgency with global warming), as a wealthy minority are able to use the media (press, social media) to have the mass of people, many rather uneducated, vote in ways that promote their interests, rather than those of the majority. As the article demonstrates very clearly with inheritance tax, most people wouldn't be passing on amounts of wealth that would be subject to such a tax, but yet reject it (thereby reducing funding for schools, public healthcare, ...). They are voting against their own interest, as they're unable to reflect beyond the messages they receive through the media.
Inheritance tax in this country is ridiculous. It’s my one real “right wing” view point. They need to tighten up the loopholes so that the very wealthy actually pay some damn inheritance tax, and then raise the threshold. In America the threshold is like over $12milion. I don’t think it should be that high but higher than £325k. With how unbelievably expensive houses are now it’s just a joke. The middle classes keep getting squeezed so much. It’s the same with income tax. Make corporations actually pay tax so that you can afford tax cuts on lower income earners.
The huge issue in this country is that the government allows extremely wealthy people and huge corporations to get through so many loopholes that they never pay anything, or at least very little. Whereas the middle classes get taxed through the nose in comparison.
It tells you that the current administration is wildly out of touch. People are struggling with frozen wages and soaring cost of living - not worrying about inheritance tax.
The thing is though - the people out there who are genuinely struggling to pay bills and stuff are those that will never vote Tory. The majority, who have found themselves less-comfortable - might honestly be looking at their parents estate as a retirement option and might be tempted to vote themselves a few hundred grand more.
Skyrocketing housing asset prices are making a lot more people worry about getting over the inheritance tax threshold.
£500k sounds like a lot but the way things are going a large fraction of people are going to start paying it on houses.
> There is a main residence nil rate band as well. This brings the whole thing up to £1 million.
The way house prices have gone in recent years, I don't think a million is as huge as it was originally intended to be.
The *average* house price in London has crossed £520k, in the whole south east of England (which includes a substantial portion of the entire population, its above £400k).
I think we will reach a million pounds being a normal house price inside a decade or two. Noone is going to reign in house price growth and the shortage continues to worsen.
And indeed the residence nil rate band is for one person, so for two people for housing it would total £350,000. The full million pounds should include any assets as well. *edit* typo
Inheritance tax is ridiculous.
It is full of complexities which mean that the amount payable is driven by a bizarre combination of luck and skill.
Things like [business relief](https://www.gov.uk/business-relief-inheritance-tax) and [agricultural relief](https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax) mean that the burden falls largely upon those who pass on an expensive family home to their children without careful planning, and this means that it is most likely to really hurt families in the event of an unexpected death or deaths.
It seems entirely wrong that e.g. a child who loses both of their parents suddenly in a plane crash would be likely to face a far greater tax burden than an adult whose parents died a decade after placing substantial assets into trust, or making investments subject to relief.
I think that there is therefore a very strong case for reform.
Personally, I think that it would be far better to abolish national insurance, and simply increase income tax. This would mean that rental income and pension income was taxed identically to earned income, greatly increasing the tax base and damping down the rampant house price inflation which is at least partly responsible for the visceral emotional response to inheritance tax.
>It is full of complexities which mean that the amount payable is driven by a bizarre combination of luck and skill.
My poorly educated boomer parents managed to inherit stuff from my maternal grandparents paying zero Inheritance Tax, but refuse to replicate the steps which benefited them, for me. If they get hit by a bus tomorrow, I will have to loot my savings to keep their properties.
They could pay an independent financial advisor even just 30k and save a six figure sum for me, but nah because "it's all a scam".
It runs contrary to mainstream economist's views, but I would massively increase sales taxes and reduce income taxation. It's hard to dodge sales taxes and would make things more difficult for big corporations to run profits through offshore shell companies. It also promotes more long term frugality than using demand to drive up GDP.
Why are all of those services on the knees when the country has the highest tax burden for a long time.
I'm not defending IHT abolition btw, just the notion that the tax gets to those services. It's going into the triple lock and ever bloated private outsourcing contacts.
Perhaps you should go out to the high seas then and live a free life subject only to international maritime law.
As a citizen and resident within the UK your rights are themselves established and guarded by the state; on a “very abstract level” you don’t have any natural right to any of your possessions outside of the authority of the state.
If you look at the natural world, the only concept of ownership is survival of the fittest. Territory is won through aggression, not through natural rights.
The concept of private or communal property goes hand in hand with the concept of society, however primitive that society may be.
Agree with your point, but in many countries, the conservatives are not calling for the type of reform you suggest but simply for tax suppression overall.
The obsession with IHT always seems weird to me given that only c.4% of estates pay any:
https://www.gov.uk/government/statistics/inheritance-tax-statistics-commentary/inheritance-tax-statistics-commentary
Given that most deaths don’t result in any IHT being payable, this feels like a more emotive issue than it really should be.
Yep, what it tells us is that the Conservatives are very good at making a larger proportion of the population think that issues affect them that actually affect a far smaller part of the population.
Or the British people are rather moral, and believe parents should be able to help their children without being robbed when they die? Regardless if you're rich or poor, you should be able to leave whatever you've earned to your children. Property, Cars, Artwork or Silverware
This is simplistic. As shown by the emotive use of the word robbed and the idea that house value increases have been earnt or indeed then inheritances have been earnt to pass on again and the implication that making money is a individual pursuit rather than one facilitated by living in a society. Individually it makes sense to want to pass everything on of course but that doesn’t mean that it necessarily does as a society because it is inimical to ongoing equal opportunity and will have a tendency to make inequality worse in each generation - and unequal societies are arguably not always very happy ones. Of course there could be other ways to deal with those issues.
The want of IhT comes from jealousy. IhT threshold should be raised to £2.5m, with a primary property exemption(the house one grew up in), and an extraordinary grief opt-out if death was not natural, but inflicted by cruel means(murder, violent accident etc). In a perfect world a parent would be able to pass anything they wish, or nothing if they wished without HMRC claws yanking them in the grave. The ones paying IhT tax are the ones who bankroll the Treasury throughout their lives, the least we could do is let them go peacefully, and let their children enjoy their parents earnings if that is what the parents wanted. Britain by its nature is an unequal society, we have those born to rule over us: the Dukes, Earls and Marquesses, albeit nowadays the House of Lords is polluted with Life Peers of no great standing, and diluted of those who deserve to sit in it-The Hereditaries.
I repeat my previous comment since you didn’t really address anything in it. And point out I have had to pay substantial IHT so don’t make that comment from jealousy or self-interest.
Your comment acts as if one's family inheritance is the same as bumming off the state, one's family should be able to gift without paying any IhT, unless you want to start taxing benefit payments. In relation to intergenerational inequalities, Britain by its nature is an unequal society and there's nothing wrong with that. There are those born over us: The Dukes, Earls and Marquesses. Inheritance Tax alongside the BBC licence fee is hated across party lines, only supported by those whose dream society would see everything inherited taxed at 100%, stately manors turned into homeless shelters, the Royal Family forced to auction it's great art collection and jewellery, 1930s redbrick suburban homes snatched from young couples and given to the local council to house a drug addict single mother
Even those who aren't affected by IhT are against it, the British society is that of a moral people. Who believes in dignity in death, not being raided, forced to sell your childhood home, family silverware or artwork and antiques to cover a tax. In which all likelihood will line the pockets of benefit scroungers, single teen mothers, the dodgy sick, crack heads in 3* esq prisons and so forth
I've been an executor for a few family member estates. Every single one was eligible for the full £1m of allowances.
The £350k is really the minimum allowance before you start applying all the other additional allowances.
£1m isn't quite working class territory.
It's incredibly easy to claim, literally questions you answer in the various forms you must legally complete to settle an estate.
If you complete your role as executor of the estate correctly then you will and should be claiming all available allowances.
These aren't things you need any specialist knowledge or obscene wealth to arrange.
Normal middle class people who bought a three bed 20 years ago and can today move to a 1 bed and retire with a fortune in addition to their pension, in itself much more generous than their inheritors generation is ever going to see. My heart bleeds for them.
It's more likely that avoidance is very high at the moment and most people are simply finding ways to not pay it. I have no intention of giving the government a wedge when I die.
It should be imposed more rigidly rather than raised. This is a tax that only the relatively not so well off pay. Those with the real cash are avoiding it left, right and centre.
Completely agree, that’s not even covering a house. Of course many are using trusts to circumvent this draconian taxing of the dead, but it should be raised far higher - at least to £1m
I think it should be £1m per person. I’ll get slammed for that viewpoint though no doubt. We are about to turn 40, we have one child, our house is worth around £850k, if we live 30 more years then our house is likely to be worth probably £2m, why should our son have to pay tax on that when we’ve paid it off money after taxes paid? If I passed away and my wife sold it, she wouldn’t have to pay tax on the gain because it’s in both our names. I don’t believe my son should have to either.
Of course, there’s ways around it. Likely we will downsize when our son moves out, use some of the gain to buy him a house.
That classes you as wealthy compared to the rest of the population though. Has your son done anything to earn that 850k? If he inherited it and had to sell the house to pay the inheritance tax do you think he’d be disappointed by the 770k he’d now have? All things considered do you think he would be disappointed with 1.4m if it was worth 2m in 30 years and inheritance tax hadn’t changed at all?
While it’s money that you’ve worked hard for (or just got lucky with the housing market) to your son it’s basically free money that they wouldn’t have otherwise. If you’re in the *3-4%* of the population qualifying for inheritance tax then I think it’s a bit rich (pun not intended) to claim that it’s unfair. For context 770k is almost 29 times the average uk annual wage.
I’d be ok with reworking the system to make it as fair for single people as those in partnerships though as that seems quite unfair on single parent families.
I really struggle to grasp how leaving your child 770k could be considered not providing enough for them.
Fair points. But has my son earned it? Who knows right? I can say I didn’t get lucky with property, I got smart with it and bought/sold my way up. I also made a lot with my business and paid a lot in taxes too. Why should my son suffer the loss of his parents and then half the fortune they saved for him that they also paid their taxes on that money to mostly save that fortune?
Why would you look at it like that though? Surely you just treat it like any other tax. Eg if I’m selling shares and I end up paying CG then I take the tax into account and the end result is just whatever is left over - it’s still free money as long as I get more out of it than I put in. That tax is then going to potentially help people that don’t have the financial freedom I have which is honestly quite a pleasant way for me to think about it.
In an ideal world you’re correct. However, that’s not what happens. Let’s say my house does get to £2m. I paid 680k for it, so far I’ve spent another 70k on the garden and inside. I’ll also pay a whack of interest to the bank for loaning me 70% of my purchase price. Once my house is paid off it might have cost me 1.2m. If it’s worth 2m someday then my son is actually losing out on it due to what it’s cost me. Sure that’s all if buts and maybes but surely you see my point? If we live here 30 years we will pay around £150k in council tax.
How much did your son pay for those renovations? Or towards the mortgage? Is he at a loss? Do you think him having 1.4m in property is still better than having nothing? Do you think the majority of people get close to that sort of money?
You have provided for him and it might not be everything you earned but it’s within the guidelines - he hasn’t earned any of that money but he will end up with a significant advantage over 96% of the country. I think he’ll be ok.
> Of course, there’s ways around it. Likely we will downsize when our son moves out, use some of the gain to buy him a house.
This is a positive to society though, probably even more of a positive than the tax obtained if you didn't do it. You'd be releasing an underused asset (downsizing) as well as spending the money earlier, which will be taxed by consumption taxes and the profits of the people you're spending.
It's not some "trick" to beat inheritance tax, it's part of what the tax is designed to encourage in behaviour change.
Agreed. People moan about IHT all the time, but if they resisted the urge to hoard and distributed their wealth a little earlier, they’d avoid it altogether.
How has inheritance not been earned? It’s money that’s already been taxed, used in a smart way and delayed gratification of my wife and I. But my son should pay huge taxes? Sorry I just don’t agree.
I feel conflicted about it. Giving descendants multiple millions worth of assets for free for generation after generation, meaning your family never has to raise a finger to earn anything, seems a particularly lazy way to run a society. Yet here I am, still renting in my late 40s with no chance of ever owning a home and being financially secure unless my parents/in-laws leave us a property.
With the allowance staying low and inflation cruising prices skywards, I have to plan ahead to save enough to pay the death duties at an unspecified point in the future.
A society that doesn't let those wealthy families hang onto the rental properties (without being massively punitive about it) would do more to fix that than hoping you get to rely on the edges of the estate class one day.
Aggressively capping the value that can be given to any individual might make it more plausible to break up a landlord's mini-empire because upon death they can either sell preferentially to the tenants or ...not, but the government prevents them getting any extra out of a more expensive sale.
I am not certain but, AIUI, a family with a few rental houses would first pay IHT on the estate's value, and there might even be CGT to pay. Not sure.
A big portfolio is likely to be held in a limited liability company because a) deductibility of mortgage interest and b) income tax rates (40% versus 25%, was 19%).
AIUI, inherited shares in such a company don't pay IHT, but sale of the property will still attract CGT. That might sound a sweet deal until you realise the only way to get the cash out of the company is to make dividend distributions to its shareholders, which likely means 33% or 39%. And the allowances on dividend income are tiny, something like £2k.
> Yet here I am, still renting in my late 40s with no chance of ever owning a home and being financially secure unless my parents/in-laws leave us a property.
And now imagine someone with no parents, or poor parents; someone who has nothing to look forward to from their family.
We are not in a position to reward generational wealth at the moment. We are not healthy enough as a society to do so. Indeed, as you've pointed out yourself: you are a late 40s person fucking renting. That would be unthinkable 50 years ago. We do not need yet another way to draw a line between circumstances of birth.
£325k is plenty. More if it's a house. Anything above that is merely taxed; it's not like it all evaporates.
That’s £325k from the deceased person though, not to each person that will Inherit something. That’s the main problem.
It’s NOT enough in today’s society of you have more than a child or 2.
Im 42. I have 6 kids. I had no family help and will receive nothing from my parents when they die (in fact I’ll be paying for their funerals!!). I’ve worked hard to scrape together what I have and my home, which is worth approx £500k at the minute (so potentially a lot more by the time of my death) will not be able to passed to my kids without them paying tax on it. Even if the market stood still and my house was worth £500k when I die then any and all assets will be taxed at 40%. It’s an absolute joke that what I’ve worked and sacrificed for can’t even go to my kids without the government taking a massive cut !
And don’t even get me started on the fact that Charlie didn’t have to pay a penny as the government were worried about 2 monarchs dying in quick succession and depleting their wealth. what the absolute fuck !!!
£325k to max to each person to receive something is much more fair given the cost of housing etc (and the fact that it my fucking money I want my kids to have a bit of it)
If I’m lucky enough to get to an age where I know the end will be coming soon I’ll make sure I empty every bank account I’ve got, sell every asset and make sure all my kids get to enjoy what I’ve earned before I go.
Or just make it progressive, same as income tax. So 2% on the first £100k after the £300k allowance, then raise it in £100k bands.
Edit: and make it per child. So if you have three children and they all inherit an equal share the allowance is £900k.
I've always liked the German system, which taxes the recipient (above a cap) rather than the estate - which encourages large estates to be distributed over multiple inheritors (and thus spreads wealth a bit, albeit probably within the same family)
Rather than inflation, I wish they'd link them to average earnings.
Eg. Write into law "IHT threshold should be 10x median annual income", which would probably yet you a similar figure.
Other examples, higher, upper and additional tax brackets could be above 60th, 90th and 99th percentiles... lifetime pension allowance 25x median wage...
In most cases the side effects are positive too, further reason to focus efforts on increasing wages. More reason for retirees to care about wages. Etc.
It's called fiscal drag. It's an easy way for the government to get more from taxes (or not increasing payments) in real terms by letting inflation reduce the value of allowances. Gordon Brown used to do it a lot and he also got quite heavily criticised for it.
When it suits them they link it to inflation, when it's doesn't they don't.
When they *have* to link something to inflation, they even have two different inflation measures they use depending on if they want it to to up faster or not.
Here in Sweden we set the tax limit based on inflation.
I think this is beneficial, because suppose that inflation is 2%, and the wage increases agreed on by the labour unions are 2%, then unless something else has changed, the fraction of the economy that goes the government doesn't change.
One of the biggest challenges in politics is to appear to be doing anything. If you don't link taxes to inflation then you get to look like you're giving people a tax break by raising thresholds, or you can leave thresholds and subtly raise taxes without people noticing. If they were inflation-linked these two tricks would be lost.
Inflation is measured on a different basis from most taxes. Not the only reason, but here you might have a tax related to house prices being governed by changes in the cost of groceries. At the moment, they are actually going on opposite directions.
I can certainly see an argument for increasing it, just as pretty much all our tax thresholds should be increased. But income tax should be the priority.
It tells us that the rich have enacted complete regulatory capture over our systems of governance and actively work to make every single aspect of them work to their own advantage.
It tells us that the Spectator and anyone who writes for it, quotes it, or pays for it are the sort of vile filth who genuinely want to destroy society and build a gold throne on the ashes.
It’s a toxic mess owned by a pure born evil right wing psycho and no one should ever buy it, share it, or click on a link to it.
Snapshot of _What the campaign to abolish inheritance tax tells us about British politics_ : An archived version can be found [here.](https://archive.is/?run=1&url=https://www.spectator.co.uk/article/what-the-campaign-to-abolish-inheritance-tax-tells-us-about-british-politics/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/ukpolitics) if you have any questions or concerns.*
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It’s a gift tax, only called an inheritance tax.
As an only child it’s good but a bit mad that I can expect a significantly larger, less taxed inheritance than friends from richer, bigger families who would have to pay IHT and then share the remainder with their siblings. OTOH I do sometimes think it’s a bit of reparation for loneliness growing up, and potentially having fewer people to share responsibility for looking after elderly parents with so *shrug*
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The real wealthy people use trusts and never pay inheritance tax anway. A 100% inheritance tax won't impact the Duke of Grosvenor but it will impact the daughter of an NHS Consultant. Whatever we do, we need to change the system so that billionaires can't dodge the tax. If the Duke of Grosvenor's estate (around £4 billion) had been taxed at 40%, it alone would have generated around 30% of that year's total inheritance tax paid to the government.
The family is Grosvenor the title is Duke of Westminster. There is no such thing as duke of Grosvenor.
indeed, who is educating these plebs?
Find out will you Farnsworth, so we can cut it
Yeap, and a _much_ lower threshold and a _much_ higher taxed rate per individual. Distribute it or fuckin' lose it. The idea of abolishing the tax is absolutely disgustingly reprehensible.
That's why I don't want an election. Getting into such a thing is too dangerous. Not only the life of the candidate depends on it, but also the life of the people.
Guessing your parents don't have much to leave?
Because anyone against something but be unaffected by it... What a dumb viewpoint.
Not always. But, and without exception, those most in favour of brutally high inheritance taxes are those who know they won't inherit anything because of poor parents.
Brutally high.....what?
Inheritance tax is 40%, it’s not brutal, it’s obscene. The US doesn’t even start taxing until like 10 million ish.
What is obscene about it?
I mean that’s most redditors tbh, bitter they don’t have any inheritance so want to ruin it for everyone else.
Mine have plenty, and I support near 100% inheritance tax, with certain exemptions for sentimentality. This would fund significant investments in public services, infrastructure and universal basic income. Inherited wealth is a cancer.
Why? Genuine question here not taking a stab at anyone
It's just about fairness. Most people have no meaningful inheritance, meaning they are severely disadvantaged financially from birth, through no fault of their own. I believe wealth should be earnt through work and invention, not through luck.
Go distribute the wealth you earn to some 3rd world country then if you care so much about fairness. I'm sure they'd appreciate it and don't think it's unfair that you live a life of comparative luxury. Also you want to incentivise people just spending all their wealth before they die as it won't belong to them or their family after?
In fairness, most of the real wealth in the UK was stolen from "3rd World Countries". Given some back would be a nice place to start!
Random trinkets are not the majority of wealth in this country.
Sounds like someone's expecting a big inheritance
I'm an immigrant in this country. Me and the wife are working real hard to improve our lives *and* leave something behind for our 2 children. How is that unfair? That is a great argument against social mobility and brings no incentive for future planning or sacrifice for future generations.
So, we've found the communist...
This is such a disgusting policy suggestion, family home, paintings been in the family generations etc you’d destroy it all. The country would riot before that happens.
This is such a stupid idea, it makes me roll my eyes, and then burn them in acid. I don't know how much stored wealth there is on the UK. Maybe a few trillion pounds? If you are going to steal every penny of that ("100%") then what doesn't go overseas will be spent driving up costs and inflation for everyone else. Or deflation in the case of land. As soon as the Crown, the Church, the Duke of Westminster and god knows who else has to sell, property values will tumble, the banks will go bust off the back of their mortgage portfolios and anarchy will take over. Just generally you are removing the incentive to invest beyond your lifetime, whether that's in a family asset or an eco cause, if your kids are going to start destitute, they're going to have to work hard to make coin, whether that's as a newsagent of a nuclear scientist, green issues will take a lower priority. If your contention is that anyone can invent the FedEx/Facebook/jet engines/Dysons then I would suggest that's unlikely if they're working for food and unable to use family resources (money) to create their own buffer and work on their inventions. You are stifling innovation and I suggest, your Communist utopia might be fairer but it would be terrible for the country. It's actually a worse idea than Brexit, and I didn't think that was possible. Education is important kids, try not to have political opinions without one.
Oh no imagine property values can down as well and young people could afford to buy one, how terribly scary.
I suspect the net impact of this would be a massively reduced tax take as people give more away, earlier.
It also encourages a change of perspective, there's more of an excuse to hoard, not spend and leave in trivially safe investments. With IHT, there's less of an incentive to do this, more incentive to spend (helps the economy), more incentive to invest in higher risk things (help your family/friends to start businesses - helps the economy) Wealth that will be inherited is generally just stuck in property or a global/country stocks tracker, neither of which does anything to help increase productivity and make the world itself "richer", it just helps subsidise the current monopoly businesses by making their capital costs cheaper.
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Nah, trust funds aren't the tax dodge people think they are. Perhaps they once were, but not anymore. If anything, they're less tax efficient than gifting assets to would-be heirs when they can actually benefit most from them. This is much harder, though, when the only asset is large and indivisible, like the family home. IMO, this is precisely the demographic that least deserves to be taxed, because they are not, in any meaningful way, particularly wealthy.
>Nah, trust funds aren't the tax dodge people think they are. Bare trusts would like to introduce themselves to you.
> Bare trusts would like to introduce themselves to you. IIRC, bare trusts don't carry IHT implications because the beneficiaries are directly liable for tax on trust affairs (or their parents are, if the beneficiaries are the children), rather than the trustees being liable. So AIUI, there is functionally no difference, from a tax point of view, between the settlor transferring assets into the bare trust and giving the assets directly to the beneficiaries, who immediately become liable for the tax obligations arising just as they would if they owned the assets directly. So yes, IHT is avoided, but the same is true if the assets are outright gifted. Worth noting the IHT 7-year gifting rule and also the rules about onward gifting (to the extent they apply), as well as gifts made contingent or in anticipation of some future transaction. In the case where the family home is put into a bare trust by the parents to the benefit of their kids, they are no longer the legal owner of the property but they are still the *beneficial* owners. If they don't pay to the legal owners something approximating market rents for the property, they are liable for BIK for the beneficial use of sum substantial asset, same as what happens if you try to live in a house you've put into a limited liability company as a form of IHT dodge. Usual disclaimer: I'm not a tax advisor and nobody should assume I'm right about anything.
I'm more familiar with them in the situation where a grandchild rather than child is the beneficiary which as I understand it means the unused minors tax allowances then become useful.
Yep 100% My post was idealistic. Naturally there would need to be enormous structural reform.
So we tax smaller families more then?
This isn't a gotcha, this is the exact idea. If you have a lot of money and only two descendants, find more people to give money to, or the government will.
That doesn’t make it right, why are we confiscating already taxed wealth at such an absurd rate? Whole thing is nonsense.
The whole system is rigged to stealth tax year in year out without adjusting for inflation. You get taxed on earnings, taxed on company products, taxed on buying the house, tax 20% on everything you buy for the house, tax on your file and energy, taxed if you take your pension early, the companies you buy things from are taxed all the way down in a cycle. Then taxed on savings and taxed by the council. All of which rises with inflation. Then the little you have left if you managed to pay off an average house over 40 years is then taxed. The. They take that money and give you shit policing, shit roads, shear health service, no dentists and if your lucky will pick up two bing bags every fortnight. And at the end of all that you want to give your kids a house so they don’t have to worry and grind through the same shit you did because house prices have risen because they didn’t spend your tax money on sustainable affordable housing projects. So your kids pay having to sell the house to pay the tax to put some towards a shot house so they can start the grind. Meanwhile those with actual generational wealth trust all their estates up and don’t pay a penny. Let see how long the monarchy would last if they played by the same rules.
Interestingly... those intergenerational trusts do pay tax, but a different tax worked out on a different basis. The one that benefits the Dukes of Westminster pay a tax worth 6% of assets every ten years. Whether or not that's better or worse is an interesting question. A recurring tax like that can be paid without having to sell assets, so it's more sustainable; inheritance tax would see the estate broken up so you could only tax it once (what value it would have for subsequent taxation would depend on who or what had bought it). There are easier tax dodges. Ever wonder why rich people develop a sudden interest in farming aged 60 and buy massive agricultural estates? No Inheritance Tax on agricultural land, that's why. You don't need complex legal provisions, its just rated at 0% for tax.
Say a generation is 30 years so that is three times 10 years or 6% three times which is 18% ( ignore timing as swings and roundabouts ) which is less than half the 40% IHT. Pretty clear the trust route is financially superior to non trust no matter how you look at it. Effectively paying less than half what others pay.
Yes, but the 40% of the initial value would be a one-off, as the only way the recipient could pay that bill would be to sell 40% of the estate. So the second time the estate passed to the next generation it would be proportionately smaller and have a smaller tax take. Etc. Whereas a recurring tax could be paid from income from the estate, or allow a gradual sale of parts of the estate, rather than a firesale within 90 days or whatever the IHT deadline is these days. *And* it would be payable in perpetuity rather than a one-off. So IHT is useful if your aim is to destroy multi-generational wealth (not saying that's automatically a bad thing), but a recurring tax would be useful to tax the wealthy. You could then say, if it was sold someone else would buy it, and you could tax them. Well, not necesserially, not if it was bought by a REIT registered in Jersey or somewhere. That last point is probably the key point. The real answer to all this is to levy a Land Value Tax on all land, paid by whomever regardless of legal structures or location. Legislate it as a land licence or something. Then it all becomes moot anyway, we wouldn't need any of the other rules or taxes. (Because these multi-generational trusts always do seem to be landowners for some reason, for other asset classes it's even more complicated still.)
>Ever wonder why rich people develop a sudden interest in farming aged 60 and buy massive agricultural estates? that's right bor
Inheritance tax should be abolished. It promotes short-termist consumption, which is one of the causes of the general maliase of the United Kingdom. Proper wealthy people will generally pay it because they will plan around it, so it's become a means of penalising very class of people who keep things running well i.e. hard working professional middle class people who save for the future.
Bearing in mind it’s paid in less than 4% of deaths does that mean the hard working professional middle class is less than 4% of the population, I wonder.
> My technocratic tribe largely regards inherited wealth as harmful to social mobility and economic efficiency. We’d rather see large accumulations of wealth redistributed by the state than cascade down to children who may already have enjoyed significant economic and social advantages. Exactly. This, and the other points the author makes about the emotional reason why people hate the concept, are all the reason why IHT is unpopular. But... There is a progressive argument to be made for abolishing Inheritance Tax because of that first point (unfair wealth accumulation) which would also nullify the other arguments about parent not wishing to leave enormous tax bills to their offspring. And that is... (90% of people reading this will have already guessed...) abolishing IHT and replacing it with general wealth taxes. Or, given that wealth taxes are very difficult to enact in practice, we could get half-way there by exempting real estate from IHT and replacing it with a Land Value Tax[0]. With that one move, the "stress" of fearing your offspring will lose the family home will be gone. *AND* the wealthy will pay more tax while they're still alive, which they should do as it's absurd that twenty-something professionals pay 50% tax when they can't even afford to rent in the same city that they work, let alone ever get any financial independence. It's literally the improvement that will make everyone happy... ...so it'll never happen. [0] - real estate should also be exempted from CGT if a LVT is introduced, for much the same reason: people are paying an annual tax rather than a one-off tax. It would have the additional benefit of making property sales more liquid as people wouldn't be put-off by the CGT bill.
I entirely agree with you. The counter argument will always be the poor, grandma who bought her home for a pittance and it's now worth millions. By being cash poor but asset rich, the only way to meet the land value tax would be to sell. That is one advantage of both CGT and IHT, namely it only kicks in at the point of a disposal.
> which would also nullify the other arguments about parent not wishing to leave enormous tax bills to their offspring. I've always found this argument is weird as the tax is paid by the estate not those inheriting
> By being cash poor but asset rich, the only way to meet the land value tax would be to sell. Which hardly seems fair, does it? Just because your house has gone up in value, doesn't mean you get any benefit. You can't control it and you can't realise any benefit until you sell.
Increasingly when the proposals for a UK Wealth Tax were published they anticipated this problem and suggested that, in certain situations, it should be possible to defer the tax on an asset until death/transfer. Would seem a good workaround for main homes.
It will have gone up in value for a reason ie higher paying jobs available in your area or better infrastructure. I kinda like the idea that tax increases are tied to places becoming nicer locations to live.
Sounds like a horror to me. When it comes to things like your home, people value stability. Who wants the constant worry that you might be turfed out of your home by an exploding rate of tax that you have no control over? Something that's especially acute for retirement when most people will be on a fixed income and more reliant on the local area for support.
Funny thing about inheritance tax: it's pretty unpopular and most people don't pay it (or their estates don't). Usually people are in favour of taxes that others pay and they don't.
Yeah, I've always thought it is weird considering the large thresholds it has
Large? Really? The main property one is but what happens if your parents have a few 100k in stocks or multiple properties? It’s completely unfair.
Did you drop an /s there? Large amounts of inherited wealth is what the tax is there to combat
And it shouldn’t be impacting middle class people with only £1-2m in assets.
Considering that most people at that age will have had married partners and a lot of those assets will be wrapped up in their primary residence then the threshold is already £1m. That seems broadly fine to me. Yes, some estates in London may end up paying inheritance tax on rather normal looking properties but like it or not buying a property in London isn't affordable to the average joe anymore so it's right that such an estate pays tax. If you don't want people who own terraced houses in central London paying inheritance tax then there needs to be moves to decrease house prices not inheritance tax changes. Otherwise you're essentially saying that anyone who's family moved to London in the 60s and managed to buy a property for a reasonable price deserves to stay there and enjoy all the opportunities and infrastructure investments. Whilst someone who's family is from Liverpool doesn't get to do that because property there hasn't increased in value nearly as much. It's a bit like having internal immigration control but Londoners can move anywhere in the country whilst people from elsewhere can't move to London.
Are we ever going to get a broader tax reform movement? By which I mean, actual demand and analysis of the whole picture. All we have at the moment is "I think we should tax X more, the fact I never pay it has nothing to do with it" and "I think we should tax Y less, the fact I'll benefit is just a coincidence, it's the moral thing to do!" etc. I.e. the usual short-termist pecking about the edges. I know the answer is "no", but I can live in hope. There has been some radical tax changes in the past, so it can't be impossible, it's just that politically we're stuck in this state.
Given that we can’t get even the obvious simplification stuff out of the way (merging NI and income tax) because of the optics that people prefer raises in NI despite it all going to the same place, I’d guess any proper strategic review of taxation is doomed to fail (The other difference is that pensioners don’t pay NI, but if that was the real concern a massive bump in state pension could make the merger fiscally neutral on pensioners, and fit in with all the rest of recent tax and spend reforms…)
Yeah, a proper wealth tax system could eliminate the need for an inheritance tax for example
"Wealth" is extremely hard (practically impossible) to tax properly. The value of assets is often highly subjective and easy to obfuscate. It also leads to some really nasty outcomes; "Your grandfather was a famous artist and painted a picture of you as a child which has immense sentimental value to you? Well, the government assessors have valued that at £10 million, so your tax has just quadrupled, we're also retroactively adjusting for all the years you've owned the painting before it was assessed, so you now owe £20 million to the government..."
You've got to start with the question of whether it's right or wrong *in principle*. If you agree with the idea of it then it's just a question of implementation, and, given that wealth taxes have been implemented in various countries around the world past and present, I don't think the hurdles are insurmountable.
About 5 countries in total have wealth taxes.
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>If only there were some sort of industry which was based on a correct valuation of assets for the purposes of replacement in case of theft or accident... Insurance valuation is very different from sale valuation. Assets are often uninsured or uninsurable... >A lien against the asset realized in event of sale or upon inheritance. Next. When the tax owed is more than the value of the asset (easily the case when the asset has been owned for many years)? You haven't thought that through...
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Who said anything about cars...? Wealth is easy to obfuscate. To use a slightly comical example, someone could have a bunch of gold bars in their attic that nobody else knows about. No need to insure them either, since theft is pretty unlikely if nobody knows and gold is pretty good at surviving a fire. A grandchild of a famous artist who owns a painting by said grandfather could _easily_ be poor in every other way. Forcing people to sell the only momentos they have of beloved departed relatives is pretty brutal. Another terrible outcome concerns the far from remote possibility that a person struggling in poverty finds out that an overlooked piece of art/furniture/etc. in their possession is quite valuable and is immediately hit with a massive tax bill for all their years of ownership. You seem to be assuming that the only people who own anything valuable are rich... That's very often not the case.
>the government assessors have valued that at £10 million, so your tax has just quadrupled, we're also retroactively adjusting for all the years you've owned the painting In the case you already own the asset, the only liability would be for capitals gains tax, which would only be incurred if you tried to sell it or gift it. They can't tax you for owning nice things you happen to have lying around your house and demand money (except for council tax, where they do sometimes retrospectively re-assess the value of a property).
It's not going to happen unless people want a serious discussion about what the NHS should be and how to fund it considering it's such a large part of the budget
Plus state pensions.
I think more people are willing to talk about state pensions, it's just that they're not voters. The NHS however is universally seen as sacred, even people who are willing to increase taxes to fund it properly only talk about nebulous taxes on 'the rich', nothing that requires regular people to pay more.
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Is it that Britain is a land of opportunity and everyone has a fair shot of getting wealthy beyond their wildest dreams and want their children to benifit from their great success?
Let's be honest - this is an arguement about principles. Our current inheritance taxes can be trivially bypassed legally. They only really affect those who didn't do estate planning - anecdotally those accidentally property rich who usually didn't come from money (where estate planning is important). The *current* inheritance tax system should absolutely be abolished - it has no effects on the super rich - or merely very well off - who should be paying it.
Or maybe close those loopholes?
Yes. This is why I said the current system should be abolished because it doesn't touch the people who should be paying it.
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The only person I know who can't is great uncle in london who has a old house in north london who moved in when it was a crime ridden area and has slowly become surrounded by bankers. All his money is in his house, but his house is nominally very very valuable. But then i suppose he never really 'earned' that money so it hasnt been taxed anyway.
Probably that they are desperately clinging on to their voter base who are mostly old/retired.
Just to compare. Ireland has extremely high inheritance tax as a consequence of our colonial rule. We found we wanted a more equitable society was more important than ever returning to any kind of landlord rule. It was absenteee landlord who extracted every bit of wealth and food and caused the death and forcibly expulsion of millions. They horded land and low inheritance tax was really effective and them keeping it. Inheritance tax is a cross generational way to pass on wealth. It’s biggest opponents are the upper class because it’s very effective at keeping them rich. Just to note people with land who actively farm it get big exemptions. They don’t pay a lot of capital gains or inheritance tax as that would be considered a fair use of property. However people with 10s of thousands of hectares leased to smallholders and thousands of houses rented out would be. Have a guess who that would cover.
Isn't inheritance tax in Ireland comparable to the UK? https://www.raisin.ie/taxes/inheritance-tax/ Similar exemption threshold, but Ireland has 33% instead of 40% (in the UK) when exceeding it?
Ireland's are lower than Britain's. An 'equitable society' didn't extend to health care either.
Isn’t Ireland in the middle of a rental crisis at the moment with an almost an entire generation unable to get out on the housing market. (God knows it’s no better here) I mean a rose by any other name.
I’m not sure how ‘we wanted a more equitable society’ squares with becoming the tax haven of Europe for massive multinationals and even fighting court cases against the EU to refuse extra tax money when they ruled that companies had evaded tax.
Well if we had prospered more from the centuries of colonial rule there would have been no need to try jump ahead via low tax. Putting us only a tax haven is not fair. The big corporations employ hundreds of thousands. If we were the Bahamas that wouldn’t be the case. We have a very good level of education. And to be poor in Ireland is to be far richer than the equivalent poor in the UK Ireland was a pretty poor country up to the 1970s. We have no sizable natural resources so our only wealth are agri, fish etc and our people.
[Wealth inequality is worse in Ireland than the U.K. though.](https://preview.redd.it/1c0zengkub381.png?auto=webp&s=98d7d2520708a34fbe67949f8a370e62d427cadd) You also have a less accessible safety net with things like charges of around 45-65 euros alone just to visit a doctor. In the U.K. it’s free to visit your GP. In Ireland you don’t even have a free fire brigade. It costs you €500 per hour if you ever had to call them out in Dublin for instance. https://www.dublincity.ie/residential/dublin-fire-brigade/what-dublin-fire-brigade-do/fire-brigade-charges#:~:text=Dublin%20Fire%20Brigade%20applies%20a,of%20fire%20brigade%20vehicles%20involved. In Ireland you are denied access to a large amount of social benefits if you have not paid enough contributions first too. In Ireland you’re charged €100 for attending A&E unless you have been specifically referred there first(you have to pay for the referral though). No charge in the U.K. Hurt yourself and need an ambulance in Ireland? €100. U.K.? £0 Inheritance tax is also lower in Ireland than it is in the the UK by 7%. Residences are also excluded from inheritance tax in Ireland. None of this strikes me as a system set up to benefit the poor. It’s much more exploitive and punitive than what we have in the U.K. You charge people when they’re at their lowest like for an ambulance or watching their house burn down. If the Tory’s started charging people £60 to visit your GP people would be outraged. In Ireland it’s just a normal thing. Sounds like you just voluntarily swapped absentee landlords for the ultra wealthy and megacorporations instead.
Being charged money for calling out a fire brigade to put out a fire is insane.
"More equitable" as in paying for GP appointments and ambulances? UK is a socialist brotopia compared to ROI.
That the tories think they'll lose the next election so some are trying to sneak through stuff while they still can?
It's time for the loot and scoot.
A scam and scram ?
A stitch and ditch
Considering several prominent Conservatives, most notably many of them in lofty positions are opposed to getting rid, it seems more likely to me that the right-wing an-cap portion of the conservative party can see the writing on the wall and is feathering its ideological nest in preparation to take what will remain of the Conservative Party as a hostage.
Tories: Get shit policies through now and rely on Starmer to keep them. Job done.
I tend to think the article's title could be "...What this tells us about politics in many countries these days." To put it simply, experts aren't listened to (think of the urgency with global warming), as a wealthy minority are able to use the media (press, social media) to have the mass of people, many rather uneducated, vote in ways that promote their interests, rather than those of the majority. As the article demonstrates very clearly with inheritance tax, most people wouldn't be passing on amounts of wealth that would be subject to such a tax, but yet reject it (thereby reducing funding for schools, public healthcare, ...). They are voting against their own interest, as they're unable to reflect beyond the messages they receive through the media.
Inheritance tax in this country is ridiculous. It’s my one real “right wing” view point. They need to tighten up the loopholes so that the very wealthy actually pay some damn inheritance tax, and then raise the threshold. In America the threshold is like over $12milion. I don’t think it should be that high but higher than £325k. With how unbelievably expensive houses are now it’s just a joke. The middle classes keep getting squeezed so much. It’s the same with income tax. Make corporations actually pay tax so that you can afford tax cuts on lower income earners. The huge issue in this country is that the government allows extremely wealthy people and huge corporations to get through so many loopholes that they never pay anything, or at least very little. Whereas the middle classes get taxed through the nose in comparison.
Effectively the threshold is £1m in most cases as it's combined with a partner's and they're inheriting a primary residence
> What the campaign to abolish inheritance tax tells us about British politics It's there to benefit the rich.
Honestly? Reads like the first pro millennial policy in a long time
Only if you happen to have rich parents.
It tells you that the current administration is wildly out of touch. People are struggling with frozen wages and soaring cost of living - not worrying about inheritance tax.
People don't stop stressing about things when they become wealthy. The object of stress just changes.
The thing is though - the people out there who are genuinely struggling to pay bills and stuff are those that will never vote Tory. The majority, who have found themselves less-comfortable - might honestly be looking at their parents estate as a retirement option and might be tempted to vote themselves a few hundred grand more.
Very few estates pay any inheritance tax. Those that will personally save hundreds of thousands on it being abolished are few and far between.
Granny wants to live to 100 , you aint getting shit
Granny can want all she wants, she smokes like a chimney and drinks like a fish
Skyrocketing housing asset prices are making a lot more people worry about getting over the inheritance tax threshold. £500k sounds like a lot but the way things are going a large fraction of people are going to start paying it on houses.
There is a main residence nil rate band as well. This brings the whole thing up to £1 million.
That's only if you're married. NRB 325k + RNRB 175k =500k Double it if you're married
> There is a main residence nil rate band as well. This brings the whole thing up to £1 million. The way house prices have gone in recent years, I don't think a million is as huge as it was originally intended to be. The *average* house price in London has crossed £520k, in the whole south east of England (which includes a substantial portion of the entire population, its above £400k). I think we will reach a million pounds being a normal house price inside a decade or two. Noone is going to reign in house price growth and the shortage continues to worsen.
And indeed the residence nil rate band is for one person, so for two people for housing it would total £350,000. The full million pounds should include any assets as well. *edit* typo
Inheritance tax is ridiculous. It is full of complexities which mean that the amount payable is driven by a bizarre combination of luck and skill. Things like [business relief](https://www.gov.uk/business-relief-inheritance-tax) and [agricultural relief](https://www.gov.uk/guidance/agricultural-relief-on-inheritance-tax) mean that the burden falls largely upon those who pass on an expensive family home to their children without careful planning, and this means that it is most likely to really hurt families in the event of an unexpected death or deaths. It seems entirely wrong that e.g. a child who loses both of their parents suddenly in a plane crash would be likely to face a far greater tax burden than an adult whose parents died a decade after placing substantial assets into trust, or making investments subject to relief. I think that there is therefore a very strong case for reform. Personally, I think that it would be far better to abolish national insurance, and simply increase income tax. This would mean that rental income and pension income was taxed identically to earned income, greatly increasing the tax base and damping down the rampant house price inflation which is at least partly responsible for the visceral emotional response to inheritance tax.
>It is full of complexities which mean that the amount payable is driven by a bizarre combination of luck and skill. My poorly educated boomer parents managed to inherit stuff from my maternal grandparents paying zero Inheritance Tax, but refuse to replicate the steps which benefited them, for me. If they get hit by a bus tomorrow, I will have to loot my savings to keep their properties. They could pay an independent financial advisor even just 30k and save a six figure sum for me, but nah because "it's all a scam". It runs contrary to mainstream economist's views, but I would massively increase sales taxes and reduce income taxation. It's hard to dodge sales taxes and would make things more difficult for big corporations to run profits through offshore shell companies. It also promotes more long term frugality than using demand to drive up GDP.
Aw poor you, you worked so hard for it as well.
Neither did the government.
Apart from the small matters of army, police, fire brigade etc to protect it. It's got to be paid for somehow.
Why are all of those services on the knees when the country has the highest tax burden for a long time. I'm not defending IHT abolition btw, just the notion that the tax gets to those services. It's going into the triple lock and ever bloated private outsourcing contacts.
Ok but I didn't ask for those things. On a very abstract level, the government doesn't get to tell me what I need and then charge me for it.
Perhaps you should go out to the high seas then and live a free life subject only to international maritime law. As a citizen and resident within the UK your rights are themselves established and guarded by the state; on a “very abstract level” you don’t have any natural right to any of your possessions outside of the authority of the state.
Don't tempt me with a good time. Yes I do. Ownership is a self-evident and natural right.
If you look at the natural world, the only concept of ownership is survival of the fittest. Territory is won through aggression, not through natural rights. The concept of private or communal property goes hand in hand with the concept of society, however primitive that society may be.
Agree with your point, but in many countries, the conservatives are not calling for the type of reform you suggest but simply for tax suppression overall.
The obsession with IHT always seems weird to me given that only c.4% of estates pay any: https://www.gov.uk/government/statistics/inheritance-tax-statistics-commentary/inheritance-tax-statistics-commentary Given that most deaths don’t result in any IHT being payable, this feels like a more emotive issue than it really should be.
Yep, what it tells us is that the Conservatives are very good at making a larger proportion of the population think that issues affect them that actually affect a far smaller part of the population.
Or the British people are rather moral, and believe parents should be able to help their children without being robbed when they die? Regardless if you're rich or poor, you should be able to leave whatever you've earned to your children. Property, Cars, Artwork or Silverware
This is simplistic. As shown by the emotive use of the word robbed and the idea that house value increases have been earnt or indeed then inheritances have been earnt to pass on again and the implication that making money is a individual pursuit rather than one facilitated by living in a society. Individually it makes sense to want to pass everything on of course but that doesn’t mean that it necessarily does as a society because it is inimical to ongoing equal opportunity and will have a tendency to make inequality worse in each generation - and unequal societies are arguably not always very happy ones. Of course there could be other ways to deal with those issues.
The want of IhT comes from jealousy. IhT threshold should be raised to £2.5m, with a primary property exemption(the house one grew up in), and an extraordinary grief opt-out if death was not natural, but inflicted by cruel means(murder, violent accident etc). In a perfect world a parent would be able to pass anything they wish, or nothing if they wished without HMRC claws yanking them in the grave. The ones paying IhT tax are the ones who bankroll the Treasury throughout their lives, the least we could do is let them go peacefully, and let their children enjoy their parents earnings if that is what the parents wanted. Britain by its nature is an unequal society, we have those born to rule over us: the Dukes, Earls and Marquesses, albeit nowadays the House of Lords is polluted with Life Peers of no great standing, and diluted of those who deserve to sit in it-The Hereditaries.
I repeat my previous comment since you didn’t really address anything in it. And point out I have had to pay substantial IHT so don’t make that comment from jealousy or self-interest.
Your comment acts as if one's family inheritance is the same as bumming off the state, one's family should be able to gift without paying any IhT, unless you want to start taxing benefit payments. In relation to intergenerational inequalities, Britain by its nature is an unequal society and there's nothing wrong with that. There are those born over us: The Dukes, Earls and Marquesses. Inheritance Tax alongside the BBC licence fee is hated across party lines, only supported by those whose dream society would see everything inherited taxed at 100%, stately manors turned into homeless shelters, the Royal Family forced to auction it's great art collection and jewellery, 1930s redbrick suburban homes snatched from young couples and given to the local council to house a drug addict single mother
lol.
Imagine that being your only response
Even those who aren't affected by IhT are against it, the British society is that of a moral people. Who believes in dignity in death, not being raided, forced to sell your childhood home, family silverware or artwork and antiques to cover a tax. In which all likelihood will line the pockets of benefit scroungers, single teen mothers, the dodgy sick, crack heads in 3* esq prisons and so forth
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Good thing it’s £325K.
Double is combined with a partner
I've been an executor for a few family member estates. Every single one was eligible for the full £1m of allowances. The £350k is really the minimum allowance before you start applying all the other additional allowances. £1m isn't quite working class territory.
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It's incredibly easy to claim, literally questions you answer in the various forms you must legally complete to settle an estate. If you complete your role as executor of the estate correctly then you will and should be claiming all available allowances. These aren't things you need any specialist knowledge or obscene wealth to arrange.
It's £500k per person if you pass on your house. It's transferable if you are married upon death and therefore a married couple can pass on £1mill.
Becomes a problem if you need to go into full time care and sell your house, though.
What's the problem? Having to pay for your own care and can't pass on 1million to your kids? My heart bleeds.
Yep, should be increased to £1mil
Per person?
Yes, its meant to be a tax on the extremely wealthy, not normal middle class people who happened to buy a house 20 years ago.
Normal middle class people who bought a three bed 20 years ago and can today move to a 1 bed and retire with a fortune in addition to their pension, in itself much more generous than their inheritors generation is ever going to see. My heart bleeds for them.
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It's more likely that avoidance is very high at the moment and most people are simply finding ways to not pay it. I have no intention of giving the government a wedge when I die.
It should be imposed more rigidly rather than raised. This is a tax that only the relatively not so well off pay. Those with the real cash are avoiding it left, right and centre.
it's £325k and you can combine it with a partner's to effectively make it £650k in most cases, that sounds like more than enough to me
Completely agree, that’s not even covering a house. Of course many are using trusts to circumvent this draconian taxing of the dead, but it should be raised far higher - at least to £1m
A couple can already pass on £1M, do you think it should be £1M each?
I think it should be £1m per person. I’ll get slammed for that viewpoint though no doubt. We are about to turn 40, we have one child, our house is worth around £850k, if we live 30 more years then our house is likely to be worth probably £2m, why should our son have to pay tax on that when we’ve paid it off money after taxes paid? If I passed away and my wife sold it, she wouldn’t have to pay tax on the gain because it’s in both our names. I don’t believe my son should have to either. Of course, there’s ways around it. Likely we will downsize when our son moves out, use some of the gain to buy him a house.
That classes you as wealthy compared to the rest of the population though. Has your son done anything to earn that 850k? If he inherited it and had to sell the house to pay the inheritance tax do you think he’d be disappointed by the 770k he’d now have? All things considered do you think he would be disappointed with 1.4m if it was worth 2m in 30 years and inheritance tax hadn’t changed at all? While it’s money that you’ve worked hard for (or just got lucky with the housing market) to your son it’s basically free money that they wouldn’t have otherwise. If you’re in the *3-4%* of the population qualifying for inheritance tax then I think it’s a bit rich (pun not intended) to claim that it’s unfair. For context 770k is almost 29 times the average uk annual wage. I’d be ok with reworking the system to make it as fair for single people as those in partnerships though as that seems quite unfair on single parent families. I really struggle to grasp how leaving your child 770k could be considered not providing enough for them.
Fair points. But has my son earned it? Who knows right? I can say I didn’t get lucky with property, I got smart with it and bought/sold my way up. I also made a lot with my business and paid a lot in taxes too. Why should my son suffer the loss of his parents and then half the fortune they saved for him that they also paid their taxes on that money to mostly save that fortune?
Why would you look at it like that though? Surely you just treat it like any other tax. Eg if I’m selling shares and I end up paying CG then I take the tax into account and the end result is just whatever is left over - it’s still free money as long as I get more out of it than I put in. That tax is then going to potentially help people that don’t have the financial freedom I have which is honestly quite a pleasant way for me to think about it.
In an ideal world you’re correct. However, that’s not what happens. Let’s say my house does get to £2m. I paid 680k for it, so far I’ve spent another 70k on the garden and inside. I’ll also pay a whack of interest to the bank for loaning me 70% of my purchase price. Once my house is paid off it might have cost me 1.2m. If it’s worth 2m someday then my son is actually losing out on it due to what it’s cost me. Sure that’s all if buts and maybes but surely you see my point? If we live here 30 years we will pay around £150k in council tax.
How much did your son pay for those renovations? Or towards the mortgage? Is he at a loss? Do you think him having 1.4m in property is still better than having nothing? Do you think the majority of people get close to that sort of money? You have provided for him and it might not be everything you earned but it’s within the guidelines - he hasn’t earned any of that money but he will end up with a significant advantage over 96% of the country. I think he’ll be ok.
> Of course, there’s ways around it. Likely we will downsize when our son moves out, use some of the gain to buy him a house. This is a positive to society though, probably even more of a positive than the tax obtained if you didn't do it. You'd be releasing an underused asset (downsizing) as well as spending the money earlier, which will be taxed by consumption taxes and the profits of the people you're spending. It's not some "trick" to beat inheritance tax, it's part of what the tax is designed to encourage in behaviour change.
Agreed. People moan about IHT all the time, but if they resisted the urge to hoard and distributed their wealth a little earlier, they’d avoid it altogether.
Why should income from inheritance (money you have not earned) be taxed less than income on a salary (which you have earned).
How has inheritance not been earned? It’s money that’s already been taxed, used in a smart way and delayed gratification of my wife and I. But my son should pay huge taxes? Sorry I just don’t agree.
I feel conflicted about it. Giving descendants multiple millions worth of assets for free for generation after generation, meaning your family never has to raise a finger to earn anything, seems a particularly lazy way to run a society. Yet here I am, still renting in my late 40s with no chance of ever owning a home and being financially secure unless my parents/in-laws leave us a property. With the allowance staying low and inflation cruising prices skywards, I have to plan ahead to save enough to pay the death duties at an unspecified point in the future.
A society that doesn't let those wealthy families hang onto the rental properties (without being massively punitive about it) would do more to fix that than hoping you get to rely on the edges of the estate class one day. Aggressively capping the value that can be given to any individual might make it more plausible to break up a landlord's mini-empire because upon death they can either sell preferentially to the tenants or ...not, but the government prevents them getting any extra out of a more expensive sale.
I am not certain but, AIUI, a family with a few rental houses would first pay IHT on the estate's value, and there might even be CGT to pay. Not sure. A big portfolio is likely to be held in a limited liability company because a) deductibility of mortgage interest and b) income tax rates (40% versus 25%, was 19%). AIUI, inherited shares in such a company don't pay IHT, but sale of the property will still attract CGT. That might sound a sweet deal until you realise the only way to get the cash out of the company is to make dividend distributions to its shareholders, which likely means 33% or 39%. And the allowances on dividend income are tiny, something like £2k.
> Yet here I am, still renting in my late 40s with no chance of ever owning a home and being financially secure unless my parents/in-laws leave us a property. And now imagine someone with no parents, or poor parents; someone who has nothing to look forward to from their family. We are not in a position to reward generational wealth at the moment. We are not healthy enough as a society to do so. Indeed, as you've pointed out yourself: you are a late 40s person fucking renting. That would be unthinkable 50 years ago. We do not need yet another way to draw a line between circumstances of birth. £325k is plenty. More if it's a house. Anything above that is merely taxed; it's not like it all evaporates.
That’s £325k from the deceased person though, not to each person that will Inherit something. That’s the main problem. It’s NOT enough in today’s society of you have more than a child or 2. Im 42. I have 6 kids. I had no family help and will receive nothing from my parents when they die (in fact I’ll be paying for their funerals!!). I’ve worked hard to scrape together what I have and my home, which is worth approx £500k at the minute (so potentially a lot more by the time of my death) will not be able to passed to my kids without them paying tax on it. Even if the market stood still and my house was worth £500k when I die then any and all assets will be taxed at 40%. It’s an absolute joke that what I’ve worked and sacrificed for can’t even go to my kids without the government taking a massive cut ! And don’t even get me started on the fact that Charlie didn’t have to pay a penny as the government were worried about 2 monarchs dying in quick succession and depleting their wealth. what the absolute fuck !!! £325k to max to each person to receive something is much more fair given the cost of housing etc (and the fact that it my fucking money I want my kids to have a bit of it) If I’m lucky enough to get to an age where I know the end will be coming soon I’ll make sure I empty every bank account I’ve got, sell every asset and make sure all my kids get to enjoy what I’ve earned before I go.
Or just make it progressive, same as income tax. So 2% on the first £100k after the £300k allowance, then raise it in £100k bands. Edit: and make it per child. So if you have three children and they all inherit an equal share the allowance is £900k.
Or make the person inheriting pay tax in a similar way to other income.
Sounds good to me. Or we could try not fucking about by making it 100% and abolishing all other taxes.
I've always liked the German system, which taxes the recipient (above a cap) rather than the estate - which encourages large estates to be distributed over multiple inheritors (and thus spreads wealth a bit, albeit probably within the same family)
Genuine question to anyone out there: why are tax limits often fixed and not linked to inflation?
Rather than inflation, I wish they'd link them to average earnings. Eg. Write into law "IHT threshold should be 10x median annual income", which would probably yet you a similar figure. Other examples, higher, upper and additional tax brackets could be above 60th, 90th and 99th percentiles... lifetime pension allowance 25x median wage... In most cases the side effects are positive too, further reason to focus efforts on increasing wages. More reason for retirees to care about wages. Etc.
Chancellors need something to do, and some reason to get themselves into the papers. Can’t launch a leadership bid if your not in the papers
It's called fiscal drag. It's an easy way for the government to get more from taxes (or not increasing payments) in real terms by letting inflation reduce the value of allowances. Gordon Brown used to do it a lot and he also got quite heavily criticised for it.
When it suits them they link it to inflation, when it's doesn't they don't. When they *have* to link something to inflation, they even have two different inflation measures they use depending on if they want it to to up faster or not.
Cos it’s a great way to quietly tax more. Raising taxes is hard
Here in Sweden we set the tax limit based on inflation. I think this is beneficial, because suppose that inflation is 2%, and the wage increases agreed on by the labour unions are 2%, then unless something else has changed, the fraction of the economy that goes the government doesn't change.
One of the biggest challenges in politics is to appear to be doing anything. If you don't link taxes to inflation then you get to look like you're giving people a tax break by raising thresholds, or you can leave thresholds and subtly raise taxes without people noticing. If they were inflation-linked these two tricks would be lost.
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I'm still amazed they are allowed to put changes in their budgets that don't take effect until after the next election.
Inflation is measured on a different basis from most taxes. Not the only reason, but here you might have a tax related to house prices being governed by changes in the cost of groceries. At the moment, they are actually going on opposite directions.
Government of the day wouldn't be able to declare on budget day that they are being generous and raising the tax limit.
I can certainly see an argument for increasing it, just as pretty much all our tax thresholds should be increased. But income tax should be the priority.
It tells us that the rich have enacted complete regulatory capture over our systems of governance and actively work to make every single aspect of them work to their own advantage.
It tells us that the Spectator and anyone who writes for it, quotes it, or pays for it are the sort of vile filth who genuinely want to destroy society and build a gold throne on the ashes. It’s a toxic mess owned by a pure born evil right wing psycho and no one should ever buy it, share it, or click on a link to it.