budget = more of us will pay more in Inheritance Tax

Pal

theGrinch wrote:

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.

All of it paid by people who were dead at the time.

theGrinch

Pal wrote:

All of it paid by people who were dead at the time.

and why should the government get a penny?

Pal

So you think that it would be sensible to abolish income tax?

mdean

I cannot believe the selfishness of some of the posts here.

If you inherit a posh house and have to pay 40% on the bit over £305K count yourself lucky rather than moaning about the tiny mortgage you will need to take out.

Or sell it and buy a perfectly nice house with the cash.

The element no-one has commented on is age. I am 42 and part of the 'baby boom' generation - got a job and a house and by the time I am 60 it will be paid off

My Mum and Dad are in their early 70s- and I hope will still be around when I am 60 - what will I need a handout from mummy and daddy for when I am 50 or 60.

Obviously my sis and me will split the house proceeds 50 50 after paying the tax - but I dont care if they move to rent and spend the lot

It works for the next generation - when I am hopefully 80 my son will be 60 and will have more money than me because of GOOD PUBLIC SERVICES!

It was the nursery, primary and secondary school that got him to Uni - and will get him a good job - so its self sufficientcy not handouts from Mummy and Daddy as the road to prosperity.

Inheritance tax is a good tax - that should catch more people when they can most afford to pay

theGrinch

posh houses in London dont start at £300k. thats a pretty ill informed view.

Once a person has paid their income tax they should have the right to do as they please with the rest. and if you are too proud to receive money via a will then you are free to gift it as you please.

A person should have the choice to spend their money or leave it to who they wish.

What are good public services? The NHS is receiving twice as much today than in 1997, yet there is a financial crisis and job cuts. what is that about?

the problem is that IHT has not kept pace will rising house prices. people are not better off if all prices have increased.

we need a comprehensive look at the tax system. there is a real argument to look at increasing certain consumption and environmental taxes while reducing others.

mdean

so why is the house such a special asset that you think you should be exempt from paying tax on it

it makes no sense

I have no idea why you think London should be the benchmark - in this part of the world you get an exceptional house for £300k

Pal

theGrinch wrote:

Once a person has paid their income tax they should have the right to do as they please with the rest.

Agreed. But the majority of people have not paid income tax on the value of their property, because the value has risen significantly above what they paid for it.

So you argue that they should get rid of inheritance tax because the NHS is badly run? What about income tax, capital gains tax, VAT etc etc...?

theGrinch

Pal wrote:

Agreed. But the majority of people have not paid income tax on the value of their property, because the value has risen significantly above what they paid for it.

So you argue that they should get rid of inheritance tax because the NHS is badly run? What about income tax, capital gains tax, VAT etc etc...?

Thats was a specific point to a previous poster saying he was very happy to pay for public services. Most of us are to an extend, provided there are results. A lack of accountability and transparency does not fill me with confidence.

Some people think if you cut tax you must cut spending. This is not the case. A recent example is Ireland. You can cut tax and increase revenue through more productivity and honesty.

IHT seems to have no logical progression and successive govts seem to make it up on the hoof. We need to stand back and ask what do we want to achieve by it in particular and the whole tax system in general.

I just dont buy the idea as house prices have risen the govt deserves to grab a chunk of it.

Pal can you answer my previous question regarding if all incomes double?

Pal

I agree with you that the tax system needs updating. Arguments about incomes doubling and "the rich" is largely irrelevant. Inheritance tax is not a tax on the rich at all. It is a tax designed to tax gains that people have made which have not previously been subject to tax - historically businesses and land being inherited, but more recently houses and share portfolios. Without taxing those gains, other taxes would need to rise to compensate for the treasury to "balance" (I use the word loosely) its "budget" (again, used loosely).

So here is a question for you. If you had the choice between paying tax on all your income while alive, or paying no income tax at all but paying all your tax on your death, which would you choose?

Most people would choose the latter, until they started approaching their death, at which point they would jump up and down and complain about how their untaxed earnings were going to be taxed when they die, so poor little Henry and Henriette would only inherit a half a million instead of a bit more than half a million. Someone would start a misguided petition in the Express...

As I said before, I believe that IHT should be replaced with a capital gains tax payable on death, so that only the profit is taxed. However given that most people don't reach the current IHT limit on death, that would probably just put up death taxes.

Which is a good thing if it means that income tax for the living can be reduced accordingly.

theGrinch

Pal wrote:

So here is a question for you. If you had the choice between paying tax on all your income while alive, or paying no income tax at all but paying all your tax on your death, which would you choose?

We agree the tax system needs a rethink.

I would go further and consider business and sales taxes and environmental and consumption taxes. The latter is one growing in popularity as we get more "green" and there is a very strong case for increasing the tax burden here.

Regarding IHT, we have had a good discussion. There are many things you can do with IHT; some of which include:

1) scrapping it altogether

2) removing or lowering the exemption and reducing the 40% to something significantly lower

3) banding IHT

4) raising the exemption band.

5) Giving tax breaks for reinvestment of estates in approved schemes rather than taxing them

6) exempting the PPR

The govt should really try to tax "bad behaviour" and encourage "good behaviour".

I would be interested to know the effect of (2) if IHT was say 10%, but on all estates. What would happen to avoidance and the revenue from a wider net?