MSE News: Savers lose nearly £18 billion a year

donkingkong

Glen_Clark wrote: »

To encourage jobs, the obvious thing to do would be to reduce the tax on jobs (National Insurance)
Instead of taxing EARNED income from jobs, tax UNEARNED income from inheritance.
But too many politicians with wealthy parents would rather not have any inheritance tax at all.- even if it means strangling the rest of the economy by increasing the jobs tax instead.

Can't think of a more efficient way.

Glen_Clark

gadgetmind wrote: »

We have such a tax, and you even mentioned its name - "inheritance tax".

And I think you'll find that tax has been paid to acquire those assets and people are just wanting to pass on a few bob to their kids rather than have the government tax it yet again.

I do, however, agree regards NI, particularly employer's NI, which is the least stealthy stealth tax one can imagine, but it still fools many people.

A few bob?
If I pay a gardener £325,000 for 40 years work - his only income - he will have to pay tax on it.
If I leave a billionaire £325,000 he has not earned he will pay no tax on it.
Is that fair?
Is that good for the economy?
Then the Government wanted to abolish Inheritance Tax altogether before 'Call Me Dave', and Gideon inherit their millions.

Your argument that I will already have paid tax on that £325,000 is just a distraction. Whatever I spend it on, including a gardeners wages, it will be taxed again. Thats the way tax works. Whenever money changes hands, the Government usually wants another slice. If money was only taxed once the Government would stop getting any income!!!

oldvicar

I think you will find that the gardener pays no tax on the wages you pay him/her, and if you require over 16 hours per week work for your poverty wages then the gardener can claim Tax Credits as well.

Glen_Clark

oldvicar wrote: »

I think you will find that the gardener pays no tax on the wages you pay him/her, and if you require over 16 hours per week work for your poverty wages then the gardener can claim Tax Credits as well.

Well Think Again!
£325,000 / 40 = £8,125 per annum.
Single person's tax free allowance = £8,105 per annum.
Would it help you if I wrote it in Spanish

oldvicar

Glen_Clark wrote: »

Well Think Again!
£325,000 / 40 = £8,125 per annum.
Single person's tax free allowance = £8,105 per annum.
Would it help you if I wrote it in Spanish

If you start to employ him/her now it won't be £8105 this tax year, and the limit is much more from next year onwards.

What a brilliant idea to write in Spanish though. There are loads of unemployed youngsters in Spain who have the right to work over here. Maybe I should employ a few on the estate.

grey_gym_sock

well, employee NI starts at £7,605 this tax year, and is charged weekly/monthly, so he/she would be paying some of that. i'm not sure what that threshold is going up to next year.

if it's a full-time job, £8,125 is less than the minimum wage! you do start paying taxes on a very low salary.

unlike inheritance tax, where you can receive a very substantial inheritance before you pay anything.

oldvicar

You can receive an unlimited inheritance and pay no tax at all.

(I'm presuming an inheritance upon death. I believe tax can be taken from the beneficiary of large lifetime gifts)

Thrugelmir

Even traditionally higher interest savings accounts such as ISAs are below inflation,

Perhaps the writer of the piece could explain why depositing money should match the rate of inflation?

Return comes with risk.

grey_gym_sock

oldvicar wrote: »

You can receive an unlimited inheritance and pay no tax at all.

i'm not sure what you mean by that ...

well, in general, whatever somebody leaves in excess of £325,000 is taxed at 40%.

however, you can receive an unlimited amount if it's from somebody you're married to, or it is in the form of certain kinds of business asset which are exempt, or if you receive inheritances from many different ppl, each of whom leaves no more than £325,000, ... etc ...

(I'm presuming an inheritance upon death. I believe tax can be taken from the beneficiary of large lifetime gifts)

lifetime gifts (after some small exempt amounts) are Potentially Exempt Transfers, i.e. if the donor lives at least 7 years after the gift, it's exempt from inheritance tax. if they die sooner, it's included (or partly included) in calculating the inheritance tax on their estate. so initially, it reduces the £325,000 exempt amount.

oldvicar

grey_gym_sock wrote:

unlike inheritance tax, where you can receive a very substantial inheritance before you pay anything

oldvicar wrote:

You can receive an unlimited inheritance and pay no tax at all.

grey_gym_sock wrote: »

i'm not sure what you mean by that ...

well, in general, whatever somebody leaves in excess of £325,000 is taxed at 40%.

however, you can receive an unlimited amount if it's from somebody you're married to, or it is in the form of certain kinds of business asset which are exempt, or if you receive inheritances from many different ppl, each of whom leaves no more than £325,000, ... etc ...

Agreed that an estate over £325K is generally subject to IHT. But it is the donor estate which is liable to tax. Your comments at times keep accidentally suggesting that its the amount a recipient gets which matters, or that the recipient gets taxed.

If I leave you £1 million (wishful thiking!), then you will receive exactly £1 million.

[For arguments sake my estate was worth e.g. £2m, enough to pay the tax on my bequest to you.]

oldvicar wrote:

(I'm presuming an inheritance upon death. I believe tax can be taken from the beneficiary of large lifetime gifts)

grey_gym_sock wrote: »

lifetime gifts (after some small exempt amounts) are Potentially Exempt Transfers, i.e. if the donor lives at least 7 years after the gift, it's exempt from inheritance tax. if they die sooner, it's included (or partly included) in calculating the inheritance tax on their estate. so initially, it reduces the £325,000 exempt amount.

Agreed. But suppose I give you my entire wealth of the same £2 million now (its only pretend money!) and I die next month.

If there was anything left in my estate it would pay the IHT due and you would pay nothing. But since there's nothing left in my estate I believe that HMRC will look to you to pay up. Otherwise there would be a lot of deathbed giving.

[To make it worse you will not get the £1million that, as you remember, I left you in my Will just a moment ago.;)]