Apparently IHT on may not be too bad?

Albermarle

DT2001 said:

ali_bear said:

There is such a thing as fiscal policy. By ending the IHT exemption for pensions it means that those with excess money in later life will start thinking about passing some of that on to the next generation earlier, instead of hoarding it away to pass down the generations unused. It brings that money back into the real economy where it can possibly benefit real living people. 

Obviously if you're a farmer then even paying half the IHT everyone else pays is the end of the world. 

I understand that many farms are only passed on following death but wonder why that is the case? If the life expectancy of farmers is similar to the general population (say early 80’s) then why not pass on the farm at SPA or the inheritors could be in their late 50’s early 60’s. Many family businesses are passed on when the children are younger. Can anyone enlighten me why this is not the case with farmers.

Because they don’t like to change their traditional ways of doing things.
As you say if they behaved more like other small family businesses, then most of the ( reduced) IHT could be avoided.

LHW99

The probelsm is many farmers live on the farm, and even when the children take over most of the heavy work, they will still be helping out at busy times. They will often have nowhere but the farmhouse to live, so if they try to pass it on earlier, unless they have enough income to pay a commercial rent to the children, it will become a gift with reservation.

RogerPensionGuy

SouthCoastBoy said:

Hoenir said:

MarkCarnage said:

QrizB said:

Universidad said:

BikingBud said:

Tell me again how house price inflation was good for us all!

It used to be good when you bought a house at the limit of affordability and over time inflation and wage increases made it a lower and lower proportion. Since salaries stopped keeping up with inflation, its made mortgages for the current generation much more expensive in real terms over time.

I'd rather like to see house prices fall by 50%, despite the fact it would reduce my paper assets by several £100k. But that would be quite the bursting bubble.

Best thing that could happen for this country (and some others) is significant real fall in house prices allowing money to go to more productive areas of the economy. 

Totally agree. We appear to be living in an illusory world. Where money is made , and subsequently spent,  by simply purchasing an "asset" . Watching it inflate in price then selling it on to somebody else who funds this with an ever increasing level of debt. While the number of people actually working productively diminish in number.  

I'm quite happy to jump on this band wagon and see house prices significantly reduce in real terms, however been wanting that to happen for over 20 years, can't see it ever happening as the economy is based on rising house prices.

O yes, this is nail on the head, housing prices must be inflated at any costs in the UK economy, it makes us feel better, get more in to debt and ramps up associated costs and taxes.

We enjoyed super low interest rates for far far too long and hoped the music would not stop, unfortunately the music has become much quieter and we have currently have average interest rates and looking like rates may stay nearer long-term average rates for a fair old time. 

Plenty of them 5 years free interest government help to buy schemes are rolling on to full debts and most likely mortgage interest rates doubling or maybe X 2.5 This will be hard to manage for many, but at least the UK builders mopped up, they enjoyed staggering profits with HTB as they just put prices up 10 to 15%

It's a mess and we may just see house prices dropping a bit these next few years. 

RogerPensionGuy

BikingBud said:

Hoenir said:

SouthCoastBoy said:

Hoenir said:

MarkCarnage said:

QrizB said:

Universidad said:

BikingBud said:

Tell me again how house price inflation was good for us all!

It used to be good when you bought a house at the limit of affordability and over time inflation and wage increases made it a lower and lower proportion. Since salaries stopped keeping up with inflation, its made mortgages for the current generation much more expensive in real terms over time.

I'd rather like to see house prices fall by 50%, despite the fact it would reduce my paper assets by several £100k. But that would be quite the bursting bubble.

Best thing that could happen for this country (and some others) is significant real fall in house prices allowing money to go to more productive areas of the economy. 

Totally agree. We appear to be living in an illusory world. Where money is made , and subsequently spent,  by simply purchasing an "asset" . Watching it inflate in price then selling it on to somebody else who funds this with an ever increasing level of debt. While the number of people actually working productively diminish in number.  

I'm quite happy to jump on this band wagon and see house prices significantly reduce in real terms, however been wanting that to happen for over 20 years, can't see it ever happening as the economy is based on rising house prices.

Always remember debating with friends the crazy rapid rise of property prices in the late 90's. We could never figure out what had changed. When Northern Rock finally collapsed in 2008 became possible to build an understanding of what the main drivers had been. Though no correction subsequently followed. As interest rates rapidly fell to rock bottom levels. In effect deferring the day of reckoning. 

Find it interesting that mortgage borrowing rates are considered high now. Yet are well below those in 2007 (prior to the (GFC).  

And that day of reckoning is still being deferred.

House prices are a thermoset, like bakelite, once they are cooked it is very difficult for them to be unwound, despite most people eventually realising the long term folly.

Yes indeed, but during the 1% mortgages years 2009/2021 and government help to buy yeast we saw owners increase the multiples of pay to mortgages and now rates are long term average, plus cost of living and high taxes, the housing cake may indeed sink a little me thinks. 

artyboy

Bit late to the party, but can I just respond to the title of this thread with - oh yeah? Because for me and Mrs Arty it's a flipping mess. 

There will be no violins for me obviously, but when you've planned for years based on a set of rules, and then those rules change to very likely leave your estate with an extra 7 figure IHT bill (at least without some significant course correction including 40% tax on draw down in retirement), then it's more than a bit galling.

Still, it's all the fault of the Tories and their black hole eh. I wonder what the next one coming our way will be blamed on...

Hoenir

BikingBud said:

Hoenir said:

SouthCoastBoy said:

Hoenir said:

MarkCarnage said:

QrizB said:

Universidad said:

BikingBud said:

Tell me again how house price inflation was good for us all!

It used to be good when you bought a house at the limit of affordability and over time inflation and wage increases made it a lower and lower proportion. Since salaries stopped keeping up with inflation, its made mortgages for the current generation much more expensive in real terms over time.

I'd rather like to see house prices fall by 50%, despite the fact it would reduce my paper assets by several £100k. But that would be quite the bursting bubble.

Best thing that could happen for this country (and some others) is significant real fall in house prices allowing money to go to more productive areas of the economy. 

Totally agree. We appear to be living in an illusory world. Where money is made , and subsequently spent,  by simply purchasing an "asset" . Watching it inflate in price then selling it on to somebody else who funds this with an ever increasing level of debt. While the number of people actually working productively diminish in number.  

I'm quite happy to jump on this band wagon and see house prices significantly reduce in real terms, however been wanting that to happen for over 20 years, can't see it ever happening as the economy is based on rising house prices.

Always remember debating with friends the crazy rapid rise of property prices in the late 90's. We could never figure out what had changed. When Northern Rock finally collapsed in 2008 became possible to build an understanding of what the main drivers had been. Though no correction subsequently followed. As interest rates rapidly fell to rock bottom levels. In effect deferring the day of reckoning. 

Find it interesting that mortgage borrowing rates are considered high now. Yet are well below those in 2007 (prior to the (GFC).  

And that day of reckoning is still being deferred.

House prices are a thermoset, like bakelite, once they are cooked it is very difficult for them to be unwound, despite most people eventually realising the long term folly.

Late 80's early 90's the bakelite did melt in a relatively short period of time. Causing considerable pain to some. 

HedgehogRulez

Why are there so many apostrophes peppering people’s posts?

Universidad

Moonwolf said:

AlanP_2 said:

Do you have a source for that statistic as it sounds extremely high to me?

It is probably from the ONS data. https://fullfact.org/online/pensioner-millionaire-households/ 

Yeah, that's the ultimate source. It's often used to suggest that pensioners are wildly rich, with lots of spare money, which the fact checking article you've linked addresses. You can be more or less on the breadline with a house in an area that was gentrified decades after you bought in.

Nevertheless, the wealth does exist, and the statistic is closer to the mark when looking at total wealth in a household, rather than being suggestive of income. There are lots of things that can bring the number down a bit by the time IHT would actually apply, such as the potential for care fees, or conversion of pension funds to annuities, but as a snapshot of who's in the ballpark so to speak, it's not a terrible indicator.

zagfles

Universidad said:

Moonwolf said:

AlanP_2 said:

Do you have a source for that statistic as it sounds extremely high to me?

It is probably from the ONS data. https://fullfact.org/online/pensioner-millionaire-households/ 

Yeah, that's the ultimate source. It's often used to suggest that pensioners are wildly rich, with lots of spare money, which the fact checking article you've linked addresses. You can be more or less on the breadline with a house in an area that was gentrified decades after you bought in.

Nevertheless, the wealth does exist, and the statistic is closer to the mark when looking at total wealth in a household, rather than being suggestive of income. There are lots of things that can bring the number down a bit by the time IHT would actually apply, such as the potential for care fees, or conversion of pension funds to annuities, but as a snapshot of who's in the ballpark so to speak, it's not a terrible indicator.

It also seems to include the value of occupational pensions in the "pension wealth" category, so someone with a DB scheme paying (or due to pay) £20k a year would have around half a million in "pension wealth"!
 
So a couple with occupation pensions of £15k each, living in a house worth £250k , and zero in other savings or assets, would be in a "millionaire household"  But they would be nowhere near the threshold for paying IHT. 

poseidon1

SmokeysTravels said:

I used to work as a Pension Wise Guider and probably did around 2000 appointments- together with my colleagues between us the number would be in the 10000s. The average pot size of the people we saw was around £50000. Most people were going to carry on working until their state pension started and try and live off that. Downsizing and equity release were often also mentioned to try to get by. The level of understanding of pensions was worryingly low. We used to reference the PLSA figures but most wouldn’t have enough to cover the minimum levels. 

I really think there should be much better financial education that starts in schools. Unfortunately, the penny only drops that people didn’t start early enough or pay enough into their pensions when it’s usually too late to do anything about it.

Thankyou,  at last a more realistic perspective of the state of play of pension provision among large segments of  the general population, from someone who worked at the sharp end of guiding such people on pension matters.

This MSE forum tends towards being a bit of an isolationist bubble in this regard and not especially representative of the wider populace.

Notwithstanding auto enrollment, I suspect an ever increasing number of future generations will be  looking squarely at just funding for the bare essentials in their eventual retirement, especially with state pension commencement moving inexorably towards age 70 in years to come. So potential IHT on their pension pots will be the least of their concerns.