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

silvercar

Choice or not the rules are there because they make sense that inheriting from outside of your parental line is a bonus over and above what you could inherit from your parental line.

If you want to avoid this, start giving away money when you are young.

At the end of the day you won’t be around to see the benefit your money has given.

poseidon1

silvercar said:

Choice or not the rules are there because they make sense that inheriting from outside of your parental line is a bonus over and above what you could inherit from your parental line.

If you want to avoid this, start giving away money when you are young.

At the end of the day you won’t be around to see the benefit your money has given.

A rather silly observation.

This country, has tax legislation which is deliberately discriminatory on grounds of public policy.

A prime example is the IHT exemption for gifts between spouses. Between 1982 all the way to 2013 it has been successive government policy to restrict this blanket exemption only to spouses who are both British born.

However where the surviving spouse is non UK domiciled ( ie not British at birth and has not acquired a British domicile of choice), until 2013 the deceased UK spouse could only pass £55,000 to the non British  survivor IHT free. Anything above that which exceeded the deceased's nil rate band was liable to capital transfer tax and latterly Inheritance tax.

Following criticism of this practice by the EEC, in 2013, the £56,000 limit was increased to £325,000  in addition to the usual £325,00 nrb, however lifetime gifts from British spouse to non British can erode the new limit. There is no potentially exempt transfers in this scenario - see explanatory article below -

https://www.ashtonslegal.co.uk/insights/news-for-individuals/international-love-mixed-domicile-spouses-and-inheritance-tax/

The fact that 99% of the UK population are entirely oblivious of these complex discriminatory measures does not make them less so. Evidently in this regard  being a non British born spouse is not a protected characteristic entitling one to the same fiscal treatment ( for IHT purposes) as a British born equivalent.

Attempts by posters to defend the UK's discriminatory fiscal laws in relation to inheritance taxes, is based on lack of knowledge of  the extreme complexity of the regime depending on the nature of relationships . I suspect that many foreign born spouses living in the UK would be unpleasantly surprised to learn that until relatively recently they were treated only marginally better than single unmarrieds.

https://www.farrer.co.uk/globalassets/news-articles/downloads/inheritance-tax-election-for-non-uk-domiciled-spouses.pdf#:~:text=As a general rule, transfers between spouses,the UK assets of a non-UK domiciliary.

DRS1

Interesting but let's not forget that the non domiciled spouse had plenty of tax breaks under UK law not just IHT (only on UK situs assets I think) but also income tax and CGT (remittance basis).

poseidon1

DRS1 said:

Interesting but let's not forget that the non domiciled spouse had plenty of tax breaks under UK law not just IHT (only on UK situs assets I think) but also income tax and CGT (remittance basis).

I think the biggest tax break for most spouses  in this scenario will be the IHT free gift exemption on death, especially where the primary asset is the matrimonial home. 

A non dom spouse with no overseas assets  or income of  note is hardly going to appreciate the non dom remittance basis of tax  or  excluded property relief they previously 'enjoyed' prior to the 2025 residence and domicile tax changes. 

 There are large number of mixed domicile uk marriages where the parties are in no way in the super wealthy league, so  IHT free gifting is the only exemption they would feel is important to them, but wholly unaware it does not necessarily apply.

mlz1413

monkey-fingers said:

Emmia said:

wolvoman said:

What an odd thread.

How can you be discriminated against because of something you (by your own admission) choose to do?

It’s a bit insulting to those who suffer real discrimination in their lives because of things they have no choice over.

Sometimes choice is removed.

Personally I'd remove the additional allowance for people with kids and make it a flat rate of say £500k per person.

Choice is rarely removed.
Just because you can't have children doesn't stop you adopting.

The argument isn't just about not being able to have children.  
It is about not wanting to have children too.

Why because I chose not to have children do I have to give the government more than those who do have children?

I am asking the same question the OP started with, why are people without children being treated differently?

Change the allowance rules to be only be for couples married before child birth and I bet the argument would headline news within hours!

MattMattMattUK

Personally I think all forms of IHT (in the UK it is actually an estate tax), should be abolished, but I cannot agree the current system is discriminatory.

Emmia

mlz1413 said:

monkey-fingers said:

Emmia said:

wolvoman said:

What an odd thread.

How can you be discriminated against because of something you (by your own admission) choose to do?

It’s a bit insulting to those who suffer real discrimination in their lives because of things they have no choice over.

Sometimes choice is removed.

Personally I'd remove the additional allowance for people with kids and make it a flat rate of say £500k per person.

Choice is rarely removed.
Just because you can't have children doesn't stop you adopting.

The argument isn't just about not being able to have children.  
It is about not wanting to have children too.

Why because I chose not to have children do I have to give the government more than those who do have children?

I am asking the same question the OP started with, why are people without children being treated differently?

Change the allowance rules to be only be for couples married before child birth and I bet the argument would headline news within hours!

Governments want people to have children, there is a falling birthrate and people are fundamentally living longer, so pensions are paid for longer and pensioners are more likely to need (expensive) NHS treatment. This is why through IHT the government incentivises having kids... Although they arguably disincentivise it via the limits on child benefit.

There are a smaller and smaller group of working age tax payers, supporting a larger and larger group of grey haired wrinkles, who are a bit untouchable in terms of raising taxes, NI isn't paid for example if you work beyond a certain age, the triple lock seems sacrosanct, and if you own a property the mortgage is probably paid off... Plus your pension is likely to be fairly healthy.

Meanwhile, university education in England is cripplingly expensive, AI may take entry level roles that those in their 20s would start in... And with no forced retirement age, those grey wrinklies are also in some areas job blocking... Preventing people moving up and freeing up their roles in turn. 

I know people argue that there are lots of poor old people, but unfortunately the same is probably true of other age groups.

mlz1413

Emmia I do completely understand your argument.  But the answers don't lay in the £175k of extra allowance on IHT.

A friends son has just taken an apprenticeship to avoid uni fees, his parents had been saving for his uni education and were originally against the decision.  But all angles considered they decided it was the right step for the career choice and a huge part of that was having a job at the end.

Personally I think the rich should pay tax in the country they live in and that all tax avoidance 'schemes' should be removed. And that includes companies!
 I believe that because again I feel everyone should be equal and be on a level playing field.

I am under no illusion that there isn't a perfect solution.  And grateful to live in a country were we all have a right to our own opinions.

Emmia

mlz1413 said:

Emmia I do completely understand your argument.  But the answers don't lay in the £175k of extra allowance on IHT.

A friends son has just taken an apprenticeship to avoid uni fees, his parents had been saving for his uni education and were originally against the decision.  But all angles considered they decided it was the right step for the career choice and a huge part of that was having a job at the end.

Personally I think the rich should pay tax in the country they live in and that all tax avoidance 'schemes' should be removed. And that includes companies!
 I believe that because again I feel everyone should be equal and be on a level playing field.

I am under no illusion that there isn't a perfect solution.  And grateful to live in a country were we all have a right to our own opinions.

I don't have children so I'm directly affected by the inequality.

Personally I think governments should up the individual limit to £500k per person, transferrable between spouses as it is now and remove the extra bit for kids. But they won't.

fuzzzzy

Emmia said:

mlz1413 said:

monkey-fingers said:

Emmia said:

wolvoman said:

What an odd thread.

How can you be discriminated against because of something you (by your own admission) choose to do?

It’s a bit insulting to those who suffer real discrimination in their lives because of things they have no choice over.

Sometimes choice is removed.

Personally I'd remove the additional allowance for people with kids and make it a flat rate of say £500k per person.

Choice is rarely removed.
Just because you can't have children doesn't stop you adopting.

The argument isn't just about not being able to have children.  
It is about not wanting to have children too.

Why because I chose not to have children do I have to give the government more than those who do have children?

I am asking the same question the OP started with, why are people without children being treated differently?

Change the allowance rules to be only be for couples married before child birth and I bet the argument would headline news within hours!

Governments want people to have children, there is a falling birthrate and people are fundamentally living longer, so pensions are paid for longer and pensioners are more likely to need (expensive) NHS treatment. This is why through IHT the government incentivises having kids... Although they arguably disincentivise it via the limits on child benefit.

There are a smaller and smaller group of working age tax payers, supporting a larger and larger group of grey haired wrinkles, who are a bit untouchable in terms of raising taxes, NI isn't paid for example if you work beyond a certain age, the triple lock seems sacrosanct, and if you own a property the mortgage is probably paid off... Plus your pension is likely to be fairly healthy.

Meanwhile, university education in England is cripplingly expensive, AI may take entry level roles that those in their 20s would start in... And with no forced retirement age, those grey wrinklies are also in some areas job blocking... Preventing people moving up and freeing up their roles in turn. 

I know people argue that there are lots of poor old people, but unfortunately the same is probably true of other age groups

You may be a grey haired wrinkly yourself one day. You can make a point without being so offensive you know.