budget = more of us will pay more in Inheritance Tax

The_Saving_Man

Pal wrote:

I agree with Inheritance Tax, although it is a bit of a blunt instument. Inheritance tax is almost always tax on unearned capital gains i.e. your parents did not work hard for their house - they bought it cheap and it rose in value without their doing anything. That gain has not been taxed and only a part of it will be taxed when it is passed down through an inheritance.

It annoys me when people claim to have worked hard for their house when it has trippled in price without their doing anything.

However I would rather it was changed to a capital gains tax, so that only the untaxed profit was taxed, rather than potentially someone paying tax twice on the same income. Very difficult to administer though.

Pal, I understanding your reasoning, but your logic is wrong. Homes are an investment not just economically but in the most rudimentary way as a place to shield from the cold. Apart from the super rich most people cannot buy their homes outright and therefore will take a mortgage. In the majority of cases this house buying loan will last for at least twenty years and in a lot of cases even longer. People during that time work hard to pay off their mortgages and other bills, including their council tax during their working life. As the price of properties rise so does the amount of borrowing on the mortgage as homeowners renew. If this wasn't the case then someone for example who bought their property thirty years ago for £15,000, would be laughing at this point. Also the price of property is heavily dependent of where you live. £250,000 might get you a good sized home in certain parts of the UK, but in others e.g. the South East, it gets you a much smaller property. I'm not saying abolish IHT completely, but at its current level their are too many people paying for something their parents worked hard for.

Andy_L

What are the options, if IHT is abolished then either:

a) the lost income is made up by increasing some other tax. ISTR that IHT is worth 1p on income tax so, assuming thats about right , would you rather pay 1% more tax for all your life rather than 40% on something you might never receive

or
b) Government spending decreases in which case would you rather pay 1% less income tax for life or not pay 40% on something you might never receive?

zag2me

If they abolish one tax, it is very likely the government will replace it with an even worse tax. Would all the people who dont have parents with overvalued property like to pay the tax instead?

Juni_3

Jay1b wrote:

I really cant see the problem with Inheritance tax, actually i quite agree with it.

Obviously those with rich parents dont agree with it.

Why should 40% of what I have go to the government when I die? I pay tax on the money I earn, tax on the money I spend, tax on the money I save etc etc etc. All the money in my estate was earnt tax paid.

It doesn't cost the government a penny when I die so why should they get their hands on it?

theGrinch

public spending is what £650 billion or thereabouts. Thats a lot to examine for reductions. In fact it was recently examined. The Treasury commissioned Sir Peter Gershon to look into savings and he identified £21bn in savings (ref BBC) that could be made. And why do many of his proposals remain to be taken up?

Most people will be happy to contribute a reasonable amount in taxation, but all I ask is transparency and accountability from those that spend our money. If they make very little effort to do this, it will only breed mistrust and resentment.

Jay1b

Juni, why shouldnt they? The tax has to come from somewhere, if not this way then in another. But it really depends on the circumstances. For example if an 18yr old still lived at home in his parents £400K house, and they was killed in a car crash... It would be wrong to have to make him sell the house which he's currently living in to pay the tax bill. However if he lived in the same £400K house, but his parents had £2million in the bank, then yes he should have to pay the tax.

(Incidentally I live in the SouthEast and my parents property is considerably more then the current £275K.)

Tax has to come from somewhere. Personally i think they should stop handouts which would save them a small fortune. But unfortunately the left wing hippies think people with no intention of ever working deserve to be kept.

Juni_3

Jay1b wrote:

Juni, why shouldnt they? The tax has to come from somewhere, if not this way then in another.

Inheritance tax was originally meant for the super rich, it was never intended for people who own a house just above the average and have some money put aside for a rainy day.

What is all this money being spent on? The country is a disaster area with no hope for youngsters starting out. My daughter told me the other day she didn't know why she was bothering trying to get good exam passes. It would be easier to "pop" out a kid and get a council place like every one else around here does.

This week I've been told my council tax has gone up yet again but they are reducing the size of our bins and charging £1 for every extra bag. More money for less service.

Roll on my last child getting to 18 so I can move abroad and get away from this madness.

Eyesparky

If the government want to take into account interest paid on financing a house, cost of improvements in labour and capital and personal time as working capital, tax associated with home ownership e.g. VAT paid on raw materials from tax paid income, council tax etc. (all index linked ofcourse) to be set off as an allowance against the perceived "gain" then a debate can start about this tax and whether it is fair. A small point should be noted that aside from personal residence property, this tax is a tax on previously taxed returns.

Whilst criticising the rich we should hope we don't scare too many away by over taxing them. For one person paying tax at a similar level to Simon Cowell we would need 3000 people on average income to cover the income tax shortfall alone should he move away. The top 1% cover 36% of the tax burden in this country. If they leave, good luck paying for a government the size of the one we currently have.

lipidicman

Omertron wrote:

....Conservative estimate is that the house is now worth upwards of £300k, they have none, if any, savings. So, when they finally die, my brother and I will be stuck with a bill of over £120k if we want to keep the house. How are we comfortably off?.

It must be worth a lot more than £300k if the bill will be £120k. My calculations suggest it must be worth £635k (£120k is 40% of £300k above the threshold). If somebody offered me a house worth more than 1/2million for £120k I would snap their arm off.

NervousYetFeisty

Juni wrote:

Why should 40% of what I have go to the government when I die? I pay tax on the money I earn, tax on the money I spend, tax on the money I save etc etc etc. All the money in my estate was earnt tax paid.

Firstly (as has been pointed out) that 40% is only paid on the proportion of the estate above the threshold.

I see what you mean about the money having had tax paid on it already, but if say, the reason the estate is so large is that house prices have risen collossally (sp?) since the property was purchased, then tax hasn't been paid on all of it.

Can an eloquent person help me out here? :rotfl: