Inheritance tax rant...

sparkle_imp

Has anybody actually looked at the deal with 'inheritance' tax?I've just been trying to get my head around it for myself after loosing a load on it after my parent's passing. it's ridiculous! try out this tax calculator http://surewill.co.uk/inheritance_tax_calculator how does the government get away with this?!? and what can we do about it?it seems such a scam we have to pay tax our whole lives then get this to put on our relatives after we die!

EdInvestor

Is it so bad?

Assets up to almost 300k are exempt per person, there is no IHT between spouses,and there are various ways you can give away (or spend!) additional money tax free before you die.

wassup

I agree with Edinvestor. I don't see any problem with the levels, in fact this is the one tax area I believe the rates should actually go up. Money is for the living not the dead. What is the point of a person hanging to excessive amounts of cash until they are dead. Either spend it as you go along and in doing so help the community around you. As for giving it to relatives, well why should they get it and what are they going to do with it, stick it away till they die too.

No anything left over should go into the big melting pot and be used for the common good.

dunstonh

There are plenty of ways of reducing/removing your IHT liability as well.

IHT is often a tax for the lazy.

exil

Estate duty in 1900 applied to all estates over £100. This was equivalent to 2 years average wage, or about 1/3 the price of the average house. In 1900 estate duty raised 8 million a year, or 8% of the total government budget - today it stands at about 15 times the average income, and 1 1/2 times the average house price, and raises about 1% of government revenue. Only 5% of estates pay IHT compared to 15% in the 1930s.

RayWolfe

No one likes to pay tax, clearly you don't but they are necessary and a tax that affects a windfall is probably the best sort.
Be pleased that you have received such a windfall and be pleased to make your contribution.
Would you rather that you, and the rest of us, pay higher income or value added tax?

SCOTTEX

dunstonh wrote:

IHT is often a tax for the lazy.

Thats a good one, coming from a financial adviser. It made me chuckle.
Any more good ones ??

ManAtHome

Think DH meant it was a tax for people who can't be !!!!!d to go see an IFA...

dunstonh

It is known as a lazy persons tax because many paying it wouldn't have to if they have taken action beforehand. Things like utilising nil rate bands, gift allowances, utilising trusts with life assurance and investments, discretionary will trusts, even just a normal will can all go someway to reduce or remove the liability.

You have people out there with millions of pounds of assets potentially who wont pay a penny in IHT whereas you have some that may only have assets of 350k who will.

Many people will be above the threshold because of the value of their property. A couple can get rid of half the value of the property just by using a discretionary will trust and having the property in tenants in common (doesnt just have to be property, it can be investments as well). That can take you to £600k without any IHT being payable (07/08 tax year).

Lil_Dee_2

dunstonh wrote:

It is known as a lazy persons tax because many paying it wouldn't have to if they have taken action beforehand.

Many people will be above the threshold because of the value of their property. A couple can get rid of half the value of the property just by using a discretionary will trust and having the property in tenants in common (doesnt just have to be property, it can be investments as well). That can take you to £600k without any IHT being payable (07/08 tax year).

A pity then, that my mother was to lazy to bother to get married before she passed away then, I guess !??

I'm sorry if I sound a little harsh (yes, you guessed it, I got hammered for IHT) but my mum worked damned hard all her life. My Grandfather worked even harder, and had profitable business, which he passed on to my mum, which she worked at seven days a week for some thirty-odd years, to keep us clothed, fed and watered. When she passed away, we discovered that because she had property (she was lucky, and managed to own three - two run down houses that she did up after the sale of her own, and the property from which her business operated from) which took us over the IHT threshold, before they'd even considered the pension and savings that she had been accumulating over the years (she was just sixty when she passed away).

The result has been a bill from the governemnt which is in no way possible for my brother and I to possibly pay, so we have had to sell one of the houses (her house, in fact) and may have to sell the other - in which my grandfather currently lives. My brother has taken over the business, but the government have taken issue over the wording of my mums will, and want us to pay tax on that too.

A lot of what has happened is because the solicitor my mum went to when she wrote her will was nothing short of useless, it turns out.

But, hey, what the hell, call my mum and my grandad lazy if you want......I know how hard they worked.

Pity the solicitor my mum went to didn't. :mad:

moonrakerz

EdInvestor wrote:

Is it so bad?

Assets up to almost 300k are exempt per person, there is no IHT between spouses

This is true, but this in itself almost a stealth tax. Anything passed to a surviving spouse adds to that person's estate; when they themself die, they only have a single person's allowance against IHT, so the first person's allowance is completely wasted.