budget = more of us will pay more in Inheritance Tax

Juni_3

NervousYetFeisty wrote:

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:

Not everyone has made a fortune out of property. A lot of us did it through hard work.

My house is worth £575,000. Exactly the same as I paid for it 4 years ago and I broke even on the two houses before that.

I've setup a trust that will be administered by the surviving spouse and my eldest son so we won't get clobbered by the inheritance tax twice as is this the case now.

Given that I've got a potential inheritance tax bill of 1.2mill everything helps.

theGrinch

theGrinch wrote:

Pal, I completely oppose inheritance tax at the current level. "rich" is a relative concept and if your property has increased to £500k, I would not say you are rich if all prices have risen. If your income doubled every 8 years, but so did everyone elses income double, would you say you are rich?

And if your income had doubled along with everyone's and it meant you were all now paying top rate tax, would you say that the top rate tax is achieving the objective it was initially designed to do?

can someone who supports IHT and supports it at the current levels answer my questions? thanks

Tom_Jones

Well anyone who has to pay a vast amount of IHT, and who hasn't set up trusts, offshore accounts, property abroad etc are idiots IMHO. It cost us just over 10 k to employ a specalist accountant and it saves us well over 300k in tax liability.

My hard earned money will go to my kids and NOT to goverment.

Jay1b

Juni, i would try to change your daughters friendship groups if i were you.

exil

Whilst I have some sympathy for some people hit by IHT (eg living in parent's house and then hit with a tax bill on their death) I'm afraid that doesn't extend to people who have estates worth 3 million (and therefore are looking at a 1.2 million bill). Sorry, if you have 3 million worth of assets you are rich, full stop.

Anyway - here's some suggestions for Gordon Brown to look at

- increase the threshold if the house you inherit is your primary residence
- levy the tax on the value of what you inherit, rather than the whole estate.
- link the threshold to the house price index

And I don't know how many times I have to say this - IHT/Death Duties used to be paid on far more estates than it does now - 20% before the war, 10%
in the 60s and 70s, so let's hear no more of "it was originally for the super rich".

theGrinch

My understanding is that many with assets over £1 mil can and do employ accountants, solicitors and trusts to mitigate IHT, while those under £275k are exempt. As with most taxes, its those trying hard to better themselves and their families that are being held back. unfortunately, these people dont riot.

Stompa

Jay1b wrote:

Yeah well i think inheritance tax is a good idea... In some way it levels the playing field ever so slightly.

I agree, I'd like to see the threshold lowered. I'd much prefer to pay more tax when I'm dead and less when I'm alive - though I guess in reality they'd rig it so it didn't actually work like that!

Stompa

Juni_3

Can't quite get my head round the idea that just because you've worked hard and got some money that makes it ok to be paying an unfair tax but that's off topic really.

Most people seem to think that it's ok for people to pay this tax because people only have this money due to rising house prices. Yet when the Government suggested putting capital gains tax on all house profits there was uproar.

moonrakerz

To go back to the original point - the raising of tax free bands is all "smoke and mirrors" anyway.
On the morning of the budget a TV financial pundit made the point that since Mr Brown doubled the limit before you pay Stamp Duty on house purchases, the total Govt income from Stamp Duty had actually risen !

theGrinch

The Government made £5.5 billion from the tax in 2004-05 compared with just £1.8 billion in 1999-00, according to Halifax, and nearly half of first-time buyers are caught in the stamp-duty net, despite the fact that the Chancellor raised the threshold from £60,000 to £120,000 last year.