Inheritance tax rant...

PosterBoy77

All these people saying that those who have money have plenty of ways to spend it before they die are just being stupid. Nobody knows when they are going to die! If someone has enough money and property to be caught by IHT later in life, they may well not be able to give any of it away before they die, as just their home may be sufficient to catch them out. Even if they can, how can someone know how much to give away to leave them enough until they do die?

The tax is wrong and should be scrapped, as it can be avoided by those the government would want to catch, but not by those people who feel they are not wealthy, but are classified as such when they die.

klondyke

moonrakerz wrote:

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.

Not wasted if already left to the kids - or anyone, come to that.

mvteng

Lil Dee,

Speaking from personal experience, I found it very worthwile seeking out a lawyer who specialises in estate management.

He was not cheap, but his knowledge of the law made his advise comparably inexpensive.

I would suggest you search on the internet. There is a society of Estate Practicioners (or something like that) who have a website which will allow you to locate a lawyer local to you.

exil

mikael wrote:

The tax is wrong and should be scrapped, as it can be avoided by those the government would want to catch, but not by those people who feel they are not wealthy, but are classified as such when they die.

That's a reason for reforming it, not scrapping it. Everyone's going on as if Gordon Brown invented this tax, it's been around for 200 years and in former times, as I have pointed out, kicked in at a level much lower than today. It's mainly responsible for so much property now being owned by the National Trust.

If a rich relative dies and leaves you a lot of money - that's a windfall. OK, so you have lost a loved one - but everyone goes through that, and most people end up with a collection of ornaments and some old furniture. Why should you not pay tax on it - you do if you (a) earn money via working (b) from investments (c) from capital gains.

The only way you get tax-free money is by an outright gift without reservation.

You could argue IHT means you're taxed twice - well not exactly. You don't pay it yourself - the benificiaries do. And most of a property's value is capital gain which has not been taxed.

RayWolfe

Lil_Dee wrote:

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).

So, you have had to pay some tax on a windfall of, what is it: half a million; a million; more? You've told us what your mum did for this; what did you do to deserve it ... tax free.
Anyway, your problem (what a nice problem to have) seems to be with a solicitor, not the law.

Lil_Dee_2

RayWolfe wrote:

So, you have had to pay some tax on a windfall of, what is it: half a million; a million; more? You've told us what your mum did for this; what did you do to deserve it ... tax free.
Anyway, your problem (what a nice problem to have) seems to be with a solicitor, not the law.

I only wish you were anywhere near right. We actually had to pay tax on bricks and mortar. The choice was sell the houses (one was supposed to be for me, the other for my brother) that my family worked all their lives to help provide for our future, or sell our own houses to pay off the tax. Nice choice....

The law states that because the combined property and pension pay-outs was worth more than the IHT limit, we owe the government money. There is no regard to the fact that the "money" is tied up in bricks and mortar and doesn't exist (there was still a mortgage on one of the houses, which swallowed up most of the pension money). Apparently we have to give the government a slice of my families belongings, just because my mum died, even though we don't physically have it.

I sincerely hope that you never find yourself with kids/grand-kids you were hoping to help onto the housing ladder in the future by leaving them something you worked damned hard to buy, only to have the goverment take most of it off them...:rolleyes:

mvteng wrote:

Lil Dee,
Speaking from personal experience, I found it very worthwile seeking out a lawyer who specialises in estate management.
He was not cheap, but his knowledge of the law made his advise comparably inexpensive.
I would suggest you search on the internet. There is a society of Estate Practicioners (or something like that) who have a website which will allow you to locate a lawyer local to you.

Mvteng - I thank you for your comments, but my mum passed on nearly 16months ago now, and we have a good local firm working on the estate.

moonrakerz

klondyke wrote:

Not wasted if already left to the kids - or anyone, come to that.

It depends what you mean by "already left" - if you gave it away more than seven years prior to your death, that is exempt from IHT anyway; anything less than that, maybe. Even then, it is nigh on impossible to make use of the full allowance.

Anything "left" in your will, with a few exceptions is distributed after Inheritance Tax is paid. this is one of the main reasons why this Tax is so disliked as several people have already pointed out. Lil Dee's case being a perfect example, where you have to sell the only asset just to pay the Tax.

The only way to make full use of both allowances is to set up a trust as dunstonh has said previously.

Dead_Eye_Jones

IHT can be very cruel when family properties are involved. Personally I think that is the only side of it that sucks, as someone who is independant I would not expect a penny from my parents, whether they worked hard or no. Id be happy for the money to go towards running the country - no shame in that.

But then you hear stories of people being forced out of their homes to settle a bill and that just sucks, no one outside of an internet forum would argue with that (we all know that on an internet forum someone will disagree, even if just for "fun";)!).

RayWolfe

Lil Dee, so you're telling us that the value of the inheritance was less than the tax the estate paid?
If so the tax is terrible and there should be a law against it! However, I doubt that was the case.
Are bricks and mortar without value? The fact that my beneficiaries will have to sell my house and my shares and my cars and my book collection mean they won't get any value? Do you think only cash left should be taxed? Do you really think that a windfall, for which, you have made no contribution should not be taxes but the income I receive (for which, I've worked damned hard, etc., etc.) should be?
No one likes tax but fairness demands that you and I pay our fair share. Be pleased that you have received well over 60% of a great deal.

Searcher2

Tagging onto this conversation... I am not really interested in whether the Government is right in taking money people who have earnt it and already paid tax on it... I would like to know if a 'Deed of Variation' or 'Deed of Family Arrangement' could help save some/all of the tax liability in our family case and if so where as good place to read up a bit about it is before employing an expert.

Aunt died leaving 1/3 of estate to 3 nephews/nieces. Early stages but it looks like the estate is valued about £500K with £150K being the house value and the rest in bonds etc. Estimate of Inheritance tax = £80-£90K.

The niece/nephews don't need the money as they are in their 60's and are ok financially but it could benefit their children more. Any idea of an example of how a deed of variation could help in this case? If at all!