Inheritance Tax - I’ve learnt to look on the bright side

Keep_pedalling

NedS said:

I generally try to view having to paying tax as a good thing - it means I have income or assets, and I'd rather have that income or those assets than not have them.

Keep_pedalling said:

FIREDreamer said:

If a couple has £1m or less, including property, then inheritance is a non issue?

If so, start spending and gifting to get below £1m.

Is this correct?

(Marginally over £1m including DC pot here, under £1m excluding it).

The problem comes when your main assets is your home which makes getting below £1M and maintaining enough liquid assets for your own needs is tricky.

If you are intent in reducing your IHT liabilities, a solution would be to financially downsize to a cheaper property/area which frees up more of the IHT allowance for liquid assets. I speak as someone who lives in an area where houses are cheaper, and our home is no longer our main asset as our SIPPs are now worth more.

We have downsized this year, from a 3 bed semi to a two bed bungalow, but it was not done for IHT reasons and after all the fees and moving costs only freed up about £90k. Nice modern energy efficient bungalows are not cheap, and had we stayed in Cambridge the type of property we bought would probably have cost more rather than free up capital. 

The priority for us was to be a bit nearer family and to have a home that would be suitable for when we become less mobile. 

Hal17

My son has just sent me a card to put in my wallet to encourage me to spend some money. It did make me smile 

Robber Reeves Ready Reckoner
Item	Actaul Cost	IHT Saving	Revised Cost
Apple Macbook Pro	£2,899	£1,160	£1,739
Nikon Z8 Camera Kit	£4,299	£1,720	£2,579
Harley Davidson Motorbike	£23,445	£9,378	£14,067
Total	£30,643	£12,258	£18,385

FIREDreamer

Hal17 said:

My son has just sent me a card to put in my wallet to encourage me to spend some money. It did make me smile 

Robber Reeves Ready Reckoner
Item	Actaul Cost	IHT Saving	Revised Cost
Apple Macbook Pro	£2,899	£1,160	£1,739
Nikon Z8 Camera Kit	£4,299	£1,720	£2,579
Harley Davidson Motorbike	£23,445	£9,378	£14,067
Total	£30,643	£12,258	£18,385

You can probably halve the saving though. She loses 40% IHT but gains 20% VAT. And some income tax too, if levied on any income to facilitate that spend. ☹️

Hal17

FIREDreamer said:

Hal17 said:

My son has just sent me a card to put in my wallet to encourage me to spend some money. It did make me smile 

Robber Reeves Ready Reckoner
Item	Actaul Cost	IHT Saving	Revised Cost
Apple Macbook Pro	£2,899	£1,160	£1,739
Nikon Z8 Camera Kit	£4,299	£1,720	£2,579
Harley Davidson Motorbike	£23,445	£9,378	£14,067
Total	£30,643	£12,258	£18,385

You can probably halve the saving though. She loses 40% IHT but gains 20% VAT. And some income tax too, if levied on any income to facilitate that spend. ☹️

I thought it sounded too good to be true. We have already gifted to son and daughter, so likely to go and spend some money on fun stuff.  

FIREDreamer

Hal17 said:

FIREDreamer said:

Hal17 said:

My son has just sent me a card to put in my wallet to encourage me to spend some money. It did make me smile 

Robber Reeves Ready Reckoner
Item	Actaul Cost	IHT Saving	Revised Cost
Apple Macbook Pro	£2,899	£1,160	£1,739
Nikon Z8 Camera Kit	£4,299	£1,720	£2,579
Harley Davidson Motorbike	£23,445	£9,378	£14,067
Total	£30,643	£12,258	£18,385

You can probably halve the saving though. She loses 40% IHT but gains 20% VAT. And some income tax too, if levied on any income to facilitate that spend. ☹️

I thought it sounded too good to be true. We have already gifted to son and daughter, so likely to go and spend some money on fun stuff.  

That’s more like it!

Bostonerimus1

Bringing DC pensions under the IHT umbrella is a sensible change to a system that seems to be a holdover from a time before DC pensions existed. However, it should also be accompanied by a substantial increase to the IHT threshold.

Albermarle

Bostonerimus1 said:

Bringing DC pensions under the IHT umbrella is a sensible change to a system that seems to be a holdover from a time before DC pensions existed. However, it should also be accompanied by a substantial increase to the IHT threshold.

Well said, if you come back to the UK, maybe you could be Chancellor !

DT2001

The inclusion of pensions in the IHT calculation will speed up our gifting plans. We are still accumulating as OH still enjoys her job and we have a very good work/life balance enjoying an average of a weeks holiday a month. Our children will be assisted with getting on the property ladder as soon as they want to. 

Our pensions take us over £2m and so lose the property relief which exacerbates the situation. Having said all of that pension contributions have worked very well for us which I think some choose to forget.

BikingBud

Hal17 said:

My son has just sent me a card to put in my wallet to encourage me to spend some money. It did make me smile 

Robber Reeves Ready Reckoner
Item	Actaul Cost	IHT Saving	Revised Cost
Apple Macbook Pro	£2,899	£1,160	£1,739
Nikon Z8 Camera Kit	£4,299	£1,720	£2,579
Harley Davidson Motorbike	£23,445	£9,378	£14,067
Total	£30,643	£12,258	£18,385

Sounds like a plan but you could ask for a better recommendation than a Harley