Inheritance Tax Article MoneySavingExpert.com Discussion

moonrakerz

RayWolfe wrote: »

I bought my house for 12,000 quid in 1974, it's now worth £550,000. Is the difference between those two amounts hard earned, or the 22% I got on my shares last year?
As for me paying tax; I am happy to do so and to receive the benefits of living in this country.

Two points:

1. I presume that you have had a mortgage from 1974 - so your gain isn't quite what it appears. Again, I presume you also "worked hard" to pay the mortgage over the years.

2. I don't mind paying tax, provided that I can see it is well spent. I have travelled widely, and I must say that here in the UK we get VERY poor value for our taxes and what we spend ourselves.
Only today I read a report that a simple medical procedure available in France for £56 is not available on the NHS, but can be done privately for £500 !

I'm afraid I don't call that a "benefit" of living in this country !

RayWolfe

1. Yes, to pay the 12k + interest, let's say 20 - 30 thou, not the half million!
2. Well, as you are so widely travelled you must also be aware of what the tax and payment cost is of the French health service.
And, don't you honestly think that any member of any country believes that their taxes are not well spent ... even Americans who pay a much lower level of tax but get no public service (except their military ... and look what they do with that).
Anyway, as quill rightly says, we are cloging up a usefull thread, so this is my final word too.
Cheers
Ray

nickpc

Mortgaging the house in retirement and giving the cash to the children or investing in business relief schemes seem to be a good way to avoid IHT if you live to 7 or 2 years

Has anyone done this ?

Andy_L

How would you pay the mortgage?

CuddlesTC

Sorry if this has been covered, but I've read all the posts and I couldn't see anything that seemed to answer the question.

My mum has got it into her head that she will give me her house now (she'll continue to live in it) and then no IHT will be due as long as she doesn't die within 7 years.

A line in the original rticle made me suspect that's not the case - can anyone tell me if she's right or not?

Andy_L

You're right, If she stays in the house rent free it will be a "gift with reservations" and will still be liable for IHT no matter how long she lives for.

CuddlesTC

Thanks Andy, that's helpful to know.

aardvaak

exil wrote: »

The situation we're in now is where most people's wealth is in the form of houses - which have soared in value as a capital gain, not due to any "work" that the house owner had done. It is this that has increased the no of estates going over the IHT threshhold.

36,000 estates paid IHT last year. However it was 50-100,000 in the 50s up to the 80s, and 150,000 before the war!

In fact, the best case for abolishing IHT is that it no longer is a big money earner for the Chancellor - only about 2 billion a year.

Why is this with property prices being much higher now!

haveshavemores

i think she would have to pay you a market rent for your share of the property to get away with this. and probably from when the legislation changed to avoid peoplke using this as ameans of tax avoidance.

this could be expensive if rents ae high in your area and she has little other income. also this would have to be a real tenancy agreement drawn up as if you were renting the property to a tennant, with records of standing order payments kept to satisfy the tax people its all above board.

you could always pass some of the money back to your mother on the quiet in the form of household goods, new tv, fridge freezer etc, but dont make it obvious to the tax man/woman

haveshavemores

i think she would have to pay you a market rent for your share of the property to get away with this. and probably from when the legislation changed to avoid peoplke using this as ameans of tax avoidance.

this could be expensive if rents ae high in your area and she has little other income. also this would have to be a real tenancy agreement drawn up as if you were renting the property to a tennant, with records of standing order payments kept to satisfy the tax people its all above board.

you could always pass some of the money back to your mother on the quiet in the form of household goods, new tv, fridge freezer etc, but dont make it obvious to the tax man/woman