Chatter about IHT changes/abolishment

Ciprico

Ecom.

You need to be very careful with this. Assuming your iht allowance  is £325k and you gifted 105k today....

....In 6 years 355 days if you died your allowance would be reduced to £220 so the taper would not be applicable to the £105 gift

Ie no real benefit at all...

Ie for the 7 year taper to function you would have to gift away your full allowance (325k)
then further gifts would be applicable to the taper.

I doubt many people can take advantage of it. But probably a lot of people fall foul of it...

mebu60

Ciprico said:

Ecom.

You need to be very careful with this. Assuming yr iht allowance  is £325k and you gifted 105k today....

....In 7 years time if you died your allowance would be reduced to £220.

Ie no real benefit at all...

Ie for the 7 year taper to function you would have to give away your full allowance (325k)
then make a gift, then live a further 7 years.

I doubt many people can take advantage of it. But probably a lot of people fall foul of it...

Not sure that is correct as written. If you live for 7 years after a gift is given there is no tax to pay and your allowance remains in full.

If you die within the 7 years then, as you say, the taper relief only applies to gifts above the allowance. Did you mean para 2 to say if you died within the 7 years your allowance would effectively be reduced to £220k in that example? 

Or am I misunderstanding something? 

Albermarle

Eco_Miser said:

newatc said:

I'd like to see the gift allowance to be raised significantly as no inflation increases haven't be applied for many a year.
I would be a good way to encourage comfortable and rich pensioners to pass funds down to the younger ones who might need it more and spend it to enrich the economy.

Actually, the lack of a gift allowance should be a good way to encourage comfortable and rich pensioners to pass funds down to the younger ones who might need it more and spend it to enrich the economy, and then live a further seven years.

Remember the gift allowance is only relevant if the donor doesn't survive seven years (give or take some tapering).

I've done the first part, with way more than the gift allowance, and am attempting the second part.

Or were you meaning the unlimited  number of £250 gifts to separate individuals? Increasing that would be useful.

Tapering effectively only applies on very large gifts, usually over £325K.

In most circumstances if you give away say £50K and die in 6years 364 days , then the full £50K will be counted back in your estate.

talexuser

After the Telegraph pumping IHT removal for weeks and weeks as the country's highest prioity, today Hunt has leaked income tax reduction as a possibility, presumably the IHT idea is not going well in ordinary focus groups.I think a lot more people think they are going to pay IHT than actually do. However after the eye watering freeze in personal allowances, particularly since inflation has raged, I will not be impressed with a penny off the standard rate anymore.

Grandst2

A DGT can remove around half the gift from your estate immediately without waiting 7 years and you receive an income for the rest of your life. A flexible reversionary trust gives you access to the capital and growth in the trust and it still drops out of your estate after 7 years. There are ways of making gifts and still have access to the monay for now.

newatc

Eco_Miser said:

newatc said:

I'd like to see the gift allowance to be raised significantly as no inflation increases haven't be applied for many a year.
I would be a good way to encourage comfortable and rich pensioners to pass funds down to the younger ones who might need it more and spend it to enrich the economy.

Actually, the lack of a gift allowance should be a good way to encourage comfortable and rich pensioners to pass funds down to the younger ones who might need it more and spend it to enrich the economy, and then live a further seven years.

Remember the gift allowance is only relevant if the donor doesn't survive seven years (give or take some tapering).

I've done the first part, with way more than the gift allowance, and am attempting the second part.

Or were you meaning the unlimited  number of £250 gifts to separate individuals? Increasing that would be useful.

We have given our children money for special reasons e.g. house purchase but on top of that we try to give away the amount of allowable exempted gifts each year as that seems good sense, Logically, and would probably happen, we would increase those annual gifts in line with any increases in the allowances. We don't regard ourselves as rich but are financially comfortable.

Albermarle

talexuser said:

After the Telegraph pumping IHT removal for weeks and weeks as the country's highest prioity, today Hunt has leaked income tax reduction as a possibility, presumably the IHT idea is not going well in ordinary focus groups.I think a lot more people think they are going to pay IHT than actually do. However after the eye watering freeze in personal allowances, particularly since inflation has raged, I will not be impressed with a penny off the standard rate anymore.

On the Sunday morning Laura Kuensberg show, the point about helping the rich 4% of families who pay IHT, during a cost of living crisis , was mentioned several times by different participants.
Clearly would be an open goal for Labour, and the Red Wall Tory MP's are dead against it.

Ocelot

artyboy said:

subjecttocontract said:

artyboy said:

subjecttocontract said:

I want ordinary people to pay IHT otherwise the rest of us will eventually have to make up the shortfall. You can't have a better everything, even under a Labour Gov, without people paying taxes.

"Ordinary" is a very subjective term, especially where tax thresholds are concerned.

But in this case, I think you actually meant "dead" 🤣

No. I was referring to an earlier contributor who posted that IHT was affecting ordinary people with ordinary houses.
I think those ordinary people should continue to pay IHT.
The country will need all the taxes it can raise if any Gov' is going to deliver on their promises.

Ah right, without a quote the context was missing but I get you now.

Honestly though, I'm not exactly motivated to go and get another job right now. Aside from any other taxes that labour might dream up, my state pension is already fully paid and I still
have close to 20 years to wait for it.

Maybe I should go and brick up some of my windows just in case.

Wasn't in the John Major Government that introduced a load of new taxes (such as airport tax and Insurance premium tax)? I don't think anyone has done any since.

xylophone

John Major 

1991

We Conservatives have always passed our values on, from generation to generation. I believe that personal prosperity should follow the same course. I want to see wealth cascading down the generations. We do not see each generation starting out anew, with the past cut off and the future ignored. So, in the next Parliament, I believe that we must go much further in encouraging every family to save and to own. To extend every family’s ability to pass on something to their children, to build up something of their own for their own.

But why should those with children be privileged over those who haven't?

The family home allowance is unfair because it discriminates against the childless.

It would make life simpler if IHT were abolished altogether - less stress on the bereaved and less work for HMRC.

https://www.ft.com/content/a35486a5-95d2-4720-a97a-058e173fb7fc

Nardy

mebu60 said:

Ciprico said:

...could impact people who have over stuffed their ISAs as an IHT avoidance vehicle. Won't impact the beneficiaries but the money could be stuck in a Sipp rather than be given away during the holders lifetime...assuming the pension would attract 40% tax....

ISAs form part of your estate for IHT purposes so unsure what 'chatter' you are referring to. Would not seem to be particularly well-informed chatter!

"unsure what 'chatter' you are referring to"

There is lots of it about on the web from newspaper and other sources. It's best to ignore it all until Hunt announces his plans and proposed tax changes.