Chatter about IHT changes/abolishment

Malthusian

Ocelot said:

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.

Blair: Lifetime Allowance Charge (and other Pension A-Day tax charges), the Climate Change Levy and the Aggregates Levy (a tax on gravel).

Tories: Diverted Profits Tax, Apprenticeship Levy, and the Soft Drinks Industry Levy (sugar tax).

*edit* You can also argue for High Income Child Benefit Charge (2013). and the withdrawal of the personal allowance above £100,000 (2010), although they can also be viewed as just extra bands within the existing income tax system.

Also the Scottish surcharge. (Scotland was given the power to levy extra tax under Blair in 1999, and first exercised it in 2017.)

talexuser

The trouble with IHT is surveys show social mobility has gone backwards, and your position in life in the majority of situations remains proportional to where and to whom you are born. There must be a point somewhere along the value of estate line where enough is enough, otherwise it seems illogical to argue that work is the best thing for people at the bottom of the scale yet at the top it's fine you might inherit so much by accident of birth you need never work again. The political argument should be at what point along that scale should wealth be taxed to keep incentives for the majority yet not entrench inequality for generations?

Ciprico

I suspect the very rich don't pay much IHT, it's carefully passed down the generations through various means that work for them but are not viable for an estate that nudged slightly into IHT territory. 

I wonder if the "only 4% actually pay it" is the true picture, it may not include a larger figure of (the wealthy)  who successfully avoid it. Especially if measured in £ and not people...

I just read an old guardian article explaining the Duke of Westminster estate avoided a single IHT bill that would equal the entire governments take of IHT in one year, through using trusts...It's old but I doubt much has changed since then...if they had paid, being one person the 4% figure would still stand but the treasury figure would have doubled

https://amp.theguardian.com/money/2016/aug/11/inheritance-tax-why-the-new-duke-of-westminster-will-not-pay-billions

Malthusian

Trusts of this kind are subject to periodic Inheritance Tax charges. In classic Grauniad style, the 2016 article manages to contradict itself in the space of two sentences (albeit the wrong sentence is from a rentaquote and the correct sentence is from the author.)

"Money can stay in the trust and cascade down from generation to generation and nobody pays inheritance tax on it.”
Instead of one-off taxation, trusts are subject to charges every 10 years from the anniversary of their creation. Known as the inheritance tax periodic charge...

As the article explains to anyone who can stay awake long enough, the Grosvenor assets mostly weren't subject to Inheritance Tax (periodic or otherwise) because they were eligible for Business Relief or Agricultural Relief, i.e. they were invested in working farms and trading businesses.

Run as a separate legal entity with its own chief executive, Grosvenor Group paid £58m in tax on profits of £527m in 2015, and has 520 employees on its payroll. Its holdings are largely expected to qualify for relief from the inheritance tax periodic charge.

But nobody understands trusts, so "Aristocrat dodges Inheritance Tax via magic trust ooga booga" gets clicks where "Aristocrat dodges Inheritance Tax by having his inheritance invested in companies carrying on a trade, under the same rule that makes it possible to pass on family-owned businesses" doesn't have the same ring to it. 

The easiest way to avoid Inheritance Tax if you are super-wealthy is to simply not be British. Plenty of attractive places to build your mansion that don't have it - Australia and the Bahamas, for example. Changing your domicile isn't a matter of just snapping your fingers, but the super-rich have far fewer ties to their homeland than a middle class person. 

Stubod

Its imperatvie that IHT is abolished as soon as possible. It effects at least 4% of the total population who desperately need to protect their wealth. Far better to make larger numbers of poor people pay a little bit extra than tax a few rich people a lot....

Signed....

Ritch S....

..sorry, Super Rich S.....

Cosmic_Life

Ciprico said:

.....  I wonder if the "only 4% actually pay it" is the true picture, it may not include a larger figure of (the wealthy)  who successfully avoid it. Especially if measured in £ and not people...

An idea of how many taxpayers were subject to inheritance tax in the last 12 months would be good to know,  does the 4% for example include children ?

subjecttocontract

I'm totally opposed to increasing IHT allowances. I think people should pay more not less.
If you want politicians to deliver on promises you need to pay more taxes not less.

eskbanker

subjecttocontract said:

If you want politicians to deliver on promises you need to pay more taxes not less.

What about the ones promising lower taxes?

Qyburn

Cosmic_Life said:

Ciprico said:

.....  I wonder if the "only 4% actually pay it" is the true picture, it may not include a larger figure of (the wealthy)  who successfully avoid it. Especially if measured in £ and not people...

An idea of how many taxpayers were subject to inheritance tax in the last 12 months would be good to know,  does the 4% for example include children ?

It's 4% of estates (actually the figure I saw was 3.73%), 27,000 a year. Saying 4% of taxpayers makes it sound like people pay every year, not just once if at all. I don't know if the estates of minors would be counted, or even if minors have estates at all.

subjecttocontract

Well none of them actually promise lower taxes.
Instead, what they sometimes provide are lower specific taxes whilst raising any lost tax income elsewhere.