IHT – unmarried and childless? Discriminatory IHT .. needs reform !

PSUK

Hello, a very long time lurker .. first time poster .. so please go easy !

As it stands, my understanding is that members of the “unmarried, childless population” people don’t get the additional “benefit” of the £175k Inheritance Tax Residence Nil Rate Band (RNRB), so are stuck with a measly £325k IHT limit and then will be hit with the whopping 40% IHT rate.

This MUST affect a HUGE proportion of the population (many probably unknowingly) who will exceed this £325k limit as they have “small’ish” estate values and would be keen to pass more to their family and friends on an equal tax paying basis.

I don’t understand how this inequality exists for people choosing not to be married or to have children - its simply DISCRIMINATORY.

So for those people in this unfair situation, what are your thoughts on this, and what are you doing to mitigate IHT?

Not just a “spend it” type comment .. but practical, simple, affordable legal easy ways for someone to say in their late fifties, who is not married / got children with a sub £1m estate with a wish to pay less IHT and to pass on more of their estate avoiding some of the 40% hit !

Has anyone has made any effort to ask for the government to review this policy and demand EQUALITY for everyone when it comes to IHT?

Have people written to their local MP and demanded a change to provide equality?

Perhaps an easy ( too obvious ? ) suggestion for HMG might be to scrap the £175k RNRB and just give EVERYONE an IHT allowance of £500k ?

That would give a simple, understandable(?), and EQUAL rate for EVERYONE.

( and imagine how much bureaucracy and wasted effort could be saved in the calculations and managing the “policing” of RNRB on estates ! )

Everyone hates IHT .. but if it is to exist then it needs a significant reform to give EQUALITY and FAIRNESS for ALL the population regardless of marital or direct descendant status.

Look forward to reading peoples comments.

PS

oh .. and ..

If any of the well known “media commentators” are reading this then perhaps you could up your game a little by raising more awareness of this IHT discrimination and inequality and even perhaps lead a campaign to drive for change and equality!  

At the moment, its always assumed and discussed by many of you that people are married / with kids .. and that a simply does not represent the whole of the population.

Emmia

I'm in this situation (but I'm married) but that's life. Fundamentally shrouds have no pockets, you don't need it when you're gone. 

I fully intend to spend it... Is it fair? No.

 Ideally the extra bit you can pass to your kids would be removed, everyone gets the same X allowance.

BridgetTheCat

Same situation. I don’t hate IHT. I don’t care - I’ll be dead. Anything anyone gets from my will will be an unexpected bonus.

Keep_pedalling

Those are the rules we have to live by, if your estate would have to pay IHT on the first death then an unmarried couple only have themselves to blame if the don’t take advantage of spousal exemption by refusing to marry or form a civil partnership. 

MeteredOut

Being unmarried and/or childless are not protected characteristics, so its not DISCRIMINATORY.

Rightly or wrongly, repeated governments are of the view that if you're cannot, or are not willing to, make a commitment with another person, or have children to benefit the wider economy, then you're not deserving of sharing the IHT benefits such decisions provide.

Have you asked your MP to pick this up on your behalf?

silvercar

I know of two pairs who have entered into civil partnerships for this reason. They aren’t couples in the traditional sense, but they have partner-shipped up with the person they intend to leave their estate to. 

silvercar

If you are only in your late 50s and have surplus cash, you could gift some of it now. If you survived 7 years it would be out of your estate.

Albermarle

This MUST affect a HUGE proportion of the population (many probably unknowingly) who will exceed this £325k limit as they have “small’ish” estate values and would be keen to pass more to their family and friends on an equal tax paying basis.

Currently only about 5% of estates pay IHT, although this is expected to rise to around 8% with the changes in unused pension pots status due in 2027. Even if half of these were single childless people, it is not a HUGE proportion of the population. Remember a significant % of the population have no, or even negative, assets.

So for those people in this unfair situation, 
There are lots of unfair situations in the tax and benefits systems, not just with IHT. They often affect people on the breadline, with no hope ever of being concerned about IHT.

Perhaps an easy ( too obvious ? ) suggestion for HMG might be to scrap the £175k RNRB and just give EVERYONE an IHT allowance of £500k ?

I believe this has been considered, although it might just have been the usual speculation you get on these matters.
It would also reduce admin as you mention.

poseidon1

PSUK said:

Hello, a very long time lurker .. first time poster .. so please go easy !

As it stands, my understanding is that members of the “unmarried, childless population” people don’t get the additional “benefit” of the £175k Inheritance Tax Residence Nil Rate Band (RNRB), so are stuck with a measly £325k IHT limit and then will be hit with the whopping 40% IHT rate.

This MUST affect a HUGE proportion of the population (many probably unknowingly) who will exceed this £325k limit as they have “small’ish” estate values and would be keen to pass more to their family and friends on an equal tax paying basis.

I don’t understand how this inequality exists for people choosing not to be married or to have children - its simply DISCRIMINATORY.

So for those people in this unfair situation, what are your thoughts on this, and what are you doing to mitigate IHT?

Not just a “spend it” type comment .. but practical, simple, affordable legal easy ways for someone to say in their late fifties, who is not married / got children with a sub £1m estate with a wish to pay less IHT and to pass on more of their estate avoiding some of the 40% hit !

Has anyone has made any effort to ask for the government to review this policy and demand EQUALITY for everyone when it comes to IHT?

Have people written to their local MP and demanded a change to provide equality?

Perhaps an easy ( too obvious ? ) suggestion for HMG might be to scrap the £175k RNRB and just give EVERYONE an IHT allowance of £500k ?

That would give a simple, understandable(?), and EQUAL rate for EVERYONE.

( and imagine how much bureaucracy and wasted effort could be saved in the calculations and managing the “policing” of RNRB on estates ! )

Everyone hates IHT .. but if it is to exist then it needs a significant reform to give EQUALITY and FAIRNESS for ALL the population regardless of marital or direct descendant status.

Look forward to reading peoples comments.

PS

oh .. and ..

If any of the well known “media commentators” are reading this then perhaps you could up your game a little by raising more awareness of this IHT discrimination and inequality and even perhaps lead a campaign to drive for change and equality!  

At the moment, its always assumed and discussed by many of you that people are married / with kids .. and that a simply does not represent the whole of the population.

Yes it is discriminatory but this is as a direct result of successive government policies ( of all political colours ) to encourage the institution of marriage and production of children, ideally within the marriage.

Having said this, not all marriages are equal, since Brits marrying non Brits in this country do  not benefit from the automatic spouse exemption on death. Again a deliberate aspect of government policy, predicated on the thinking that the inheriting foreign spouse  would disappear abroad with their 'ill-gotten' gains on death of their British spouse. 

Like yourself, also single and childless ( entirely by choice), and also chaffing at the injustice which will no doubt worsen, once we get details of how  IHT will  be applied to DC pension pots in future.

However, I am familiar with life assurance trust based investment schemes which can help mitigate/ avoid IHT on gifts to non exempt beneficiaries ( DGTs, gift and loan trusts, etc), which I can deploy with liquid funds. However, for singletons with most of their wealth in their home, there are few effective planning opportunities available to them.

As you will no doubt observe  you will get minimal support for your 'campaign' from forumites here. My sense is we singletons are a very small minority on the forum, and as regard the population as a whole we are an even  smaller contingent of those with any meaningful IHT exposure.  

silvercar

poseidon1 said:

PSUK said:

Hello, a very long time lurker .. first time poster .. so please go easy !

As it stands, my understanding is that members of the “unmarried, childless population” people don’t get the additional “benefit” of the £175k Inheritance Tax Residence Nil Rate Band (RNRB), so are stuck with a measly £325k IHT limit and then will be hit with the whopping 40% IHT rate.

This MUST affect a HUGE proportion of the population (many probably unknowingly) who will exceed this £325k limit as they have “small’ish” estate values and would be keen to pass more to their family and friends on an equal tax paying basis.

I don’t understand how this inequality exists for people choosing not to be married or to have children - its simply DISCRIMINATORY.

So for those people in this unfair situation, what are your thoughts on this, and what are you doing to mitigate IHT?

Not just a “spend it” type comment .. but practical, simple, affordable legal easy ways for someone to say in their late fifties, who is not married / got children with a sub £1m estate with a wish to pay less IHT and to pass on more of their estate avoiding some of the 40% hit !

Has anyone has made any effort to ask for the government to review this policy and demand EQUALITY for everyone when it comes to IHT?

Have people written to their local MP and demanded a change to provide equality?

Perhaps an easy ( too obvious ? ) suggestion for HMG might be to scrap the £175k RNRB and just give EVERYONE an IHT allowance of £500k ?

That would give a simple, understandable(?), and EQUAL rate for EVERYONE.

( and imagine how much bureaucracy and wasted effort could be saved in the calculations and managing the “policing” of RNRB on estates ! )

Everyone hates IHT .. but if it is to exist then it needs a significant reform to give EQUALITY and FAIRNESS for ALL the population regardless of marital or direct descendant status.

Look forward to reading peoples comments.

PS

oh .. and ..

If any of the well known “media commentators” are reading this then perhaps you could up your game a little by raising more awareness of this IHT discrimination and inequality and even perhaps lead a campaign to drive for change and equality!  

At the moment, its always assumed and discussed by many of you that people are married / with kids .. and that a simply does not represent the whole of the population.

Yes it is discriminatory but this is as a direct result of successive government policies ( of all political colours ) to encourage the institution of marriage and production of children, ideally within the marriage.

Having said this, not all marriages are equal, since Brits marrying non Brits in this country do  not benefit from the automatic spouse exemption on death. Again a deliberate aspect of government policy, predicated on the thinking that the inheriting foreign spouse  would disappear abroad with their 'ill-gotten' gains on death of their British spouse. 

Like yourself, also single and childless ( entirely by choice), and also chaffing at the injustice which will no doubt worsen, once we get details of how  IHT will  be applied to DC pension pots in future.

However, I am familiar with life assurance trust based investment schemes which can help mitigate/ avoid IHT on gifts to non exempt beneficiaries ( DGTs, gift and loan trusts, etc), which I can deploy with liquid funds. However, for singletons with most of their wealth in their home, there are few effective planning opportunities available to them.

As you will no doubt observe  you will get minimal support for your 'campaign' from forumites here. My sense is we singletons are a very small minority on the forum, and as regard the population as a whole we are an even  smaller contingent of those with any meaningful IHT exposure.  

I think the view is that if you inheriting from someone that is not directly in your family line, it is an absolute bonus and additional to an inheritance you might have got from your parents, so people aren’t that bothered if some is lost to tax. Plus if you had had children they would be contributing to the older generations pension through taxation, so your estate being taxed is like a payback for the pension you got.

PSUK

Many thanks for all your responses so far.