Inheritance Tax

[titchbit]

IMO the motivation behind it is just to gain more tax revenue but it's kinda a good idea when you think about it because it hinders "old money" and family dynasties and people just getting rich from doing nothing but inheriting their parents money. so in other words it keeps money circulating and stops it from sitting in rich kid's bank accounts.

[Laszlo]

IMO the motivation behind it is just to gain more tax revenue but it's kinda a good idea when you think about it because it hinders "old money" and family dynasties and people just getting rich from doing nothing but inheriting their parents money. so in other words it keeps money circulating and stops it from sitting in rich kid's bank accounts.

Like I say, the super rich get around it no problem.

[magma]

Commie gibberish

Right, so if someone's parents die and leave them the family home as inheritance, which they immediately have to sell to pay the tax bill, that's fair game?

Depends on the value of the house; as I said, I haven't really thought terribly hard about thresholds since it's not a very common thing for me to think about. If my parents left me their house, I'd have to sell it in order to cover the tax bill. But it's not like I'm currently living in it or anything. It's my parents house. Apart from whatever sentimental value, all it is is a big pile of cash in a form I can't use unless I want to move to Somerset.

why not? how does it affect you if richard branson's great great grandkids never have to work? jealousy imo

Because there's nothing as effective at unbalancing a first world society as a poor distribution of income. As a 30-something that was raised in something that still considered itself a "progressive" nation, I believe that (within reason) a child's opportunities in life shouldn't be affected positively or negatively by the circumstances of their birth.

I agree that leaving a little behind is a nice thing to do, but it is only available as a symptom of having earned more than you could/would spend. Your kids have their entire lives to take the same chances to earn as you... if you managed to make £500k more than you managed to spend during your life, then they can do exactly the same thing. You've probably already spent their childhoods giving them every headstart in the world - education, shelter, food, clothes, toys etc etc, do you really need to keep holding their hands from beyond the grave? Isn't that the time when children are supposed to become the.... adults?

On a micro scale, inheritance is exactly what we want to create as parents. That's perfectly natural. On a macro scale, the only thing inheritance does is create an unfair playing field for the next generation - controls HAVE to be created in order to minimise its effect on society.

[magma]

IMO the motivation behind it is just to gain more tax revenue but it's kinda a good idea when you think about it because it hinders "old money" and family dynasties and people just getting rich from doing nothing but inheriting their parents money. so in other words it keeps money circulating and stops it from sitting in rich kid's bank accounts.

Like I say, the super rich get around it no problem.

People find ways round all sorts of things; that's no reason to just make them free-for-alls. In typically Internet-friendly hyperbole, people get away with rape every day. I'm not about to argue for saying "fuck it; if Saville can get away with it until he's dead, we might as well just scrap the whole thing."

[wub]

It's my parents house. Apart from whatever sentimental value, all it is is a big pile of cash in a form I can't use unless I want to move to Somerset.

That's my point though - even if you did want to use it, you'd have to pay 40% tax, and depending on the value of the house/your own finances this might result in you having to sell it anyway.

[Laszlo]

IMO the motivation behind it is just to gain more tax revenue but it's kinda a good idea when you think about it because it hinders "old money" and family dynasties and people just getting rich from doing nothing but inheriting their parents money. so in other words it keeps money circulating and stops it from sitting in rich kid's bank accounts.

Like I say, the super rich get around it no problem.

People find ways round all sorts of things; that's no reason to just make them free-for-alls. In typically Internet-friendly hyperbole, people get away with rape every day. I'm not about to argue for saying "fuck it; if Saville can get away with it until he's dead, we might as well just scrap the whole thing."

My point being is that it doesn't hinder old money or family dynasties at all. Not in the slightest.

[m8son666]

jealousy imo

[magma]

It's my parents house. Apart from whatever sentimental value, all it is is a big pile of cash in a form I can't use unless I want to move to Somerset.

That's my point though - even if you did want to use it, you'd have to pay 40% tax, and depending on the value of the house/your own finances this might result in you having to sell it anyway.

But given I'll get the same chance at a career as my father, whose parents ran a Post Office just outside Newbury and became Director of a major Building Society; why can't I just aim to do as well as him? Why would I want my father to still be paying my way when I'm an adult? How much pride am I supposed to take in that?

There's only one member of my family that I think deserves as much inheritance as they can get and that's because they're borderline disabled and find it incredibly difficult to work at the level the rest of us do. I've got a good career which I've been working at since I was 18. I've got side hustles. I want to sit back when I'm 60 and survey everything I've built over 40 years of toil.

My Dad is my shining example to follow, not my life-long enabler. That ended when I flew the nest. I want to do as well as him, not well because of him.

[wub]

Guardian editorial piece

No-one is saying you shouldn't be your own man etc etc etc. But what right does the government have to effectively force people to sell their family homes irrespective of circumstance if they can't meet a 40% tax bill straight off the bat?

[magma]

Guardian editorial piece

No-one is saying you shouldn't be your own man etc etc etc. But what right does the government have to effectively force people to sell their family homes irrespective of circumstance if they can't meet a 40% tax bill straight off the bat?

Well, let's look at the numbers shall we?

The average value of a home in the UK is £242k

The threshold for being taxed on inheritance is £325k, therefore you can leave your kids an average home plus nearly £80k in cash and investments without them being taxed a penny.

That strikes me as pretty appropriate, fair and dare I say even generous. Yes, parents should be able to leave a 'normal' valued house or modest nest egg for their kids. No, parents shouldn't be able to create multi-generational dynasties by winning the lottery. Money should, on the whole, be spent by the people that earned it.

Is it maybe just sentimentality that you're worried about with people being forced out of their family homes? That we should relax legislation so that a few people can have a nice warm fuzzy feeling of moving back into their childhood home as adults (or staying there for their whole lives) and won't have to do nasty, mean bits of paperwork when their loved ones have snuffed it? I can't say I'm much of a fan of legislating for sentimentality.

My apologies for writing in the style of a newspaper that most people round here generally approve of and I proudly read most days. Would you rather I ignored my well-known progressive leanings and stuck to the knee-jerk "BUT IT'S NOT FAIR!" level of cognition that's so far been dominating the thread? Maybe it'd be better if I shot for a Daily Star sort of level?

[titchbit]

Yeah 40% might be a little steep for an inheritance tax. I think magma is right about why there is an inheritance tax. it's to prevent a sort of negative externality. But how steep you think that tax should be is definitely up to a fair debate.

A flat rate probably isn't a good idea either. It should increase as the amount of money the inheritance is worth increases. They should also take the person who is inheriting it into account somehow, ie someone with a 10 million dollar salary should pay a higher percentage, while someone who is disabled and can't work should pay a lower percetage...




(Coincidentally, I listened to one of my family members rant about inheritance taxes last night, extremely arrogant, acting like they're worth waaaaaayyyy more than they really are. the "blacks" are gonna steal all their money starting with the obammunist wah wah wah. this is why I turned into a liberal. they just never skip an opportunity to ram unwanted "life lessons" down your throat....)

[magma]

Yeah 40% might be a little steep for an inheritance tax. I think magma is right about why there is an inheritance tax. it's to prevent a sort of negative externality. But how steep you think that tax should be is definitely up to a fair debate.

A flat rate probably isn't a good idea either. It should increase as the amount of money the inheritance is worth increases. They should also take the person who is inheriting it into account somehow, ie someone with a 10 million dollar salary should pay a higher percentage, while someone who is disabled and can't work should pay a lower percetage...

Yep, agree with that entirely. Means testing is difficult (especially if Daddy's poor orphaned girls haven't had to ever get a job) but there aren't many taxes it shouldn't be applied to IMHO.

[magma]

Because the government are stnuc.

My point being is that it doesn't hinder old money or family dynasties at all. Not in the slightest.

I think these are probably the two most common thoughts in the debate, so I'm gonna BM the thread to address their slightly knee-jerk nature.

I know you're just being flippant, wub, but it's not "because the government are stnuc" in the slightest (and that's not to argue the current lot aren't stnuc indeed). For a start, the vast majority of the money they raise through taxation is spent on public service... i.e. on us. The money most of us pay out in various forms of tax, we get back in kind as a result of living in a socialised economy. You have to be quite far ahead of the curve to "lose" from current levels of taxation. Schools, hospitals, the armed forces, the police, the fire service, libraries and all the compound effects on the 'quality' of society... well... a great deal of everything we come into contact with is enabled by taxes one way or another. It's not like it goes directly into the Prime Minister's pocket - in fact, he'd probably be far better off if it didn't exist. Inheritance taxation is one of the chief reasons we've no danger of becoming born-serfs to hereditary lords of the manor ever again.

The first inheritance/estate taxes were introduced in the 1700s during the rise of industrialisation as a method of redistributing 'old money' and nepotist opportunity toward the newly enfranchised working man. It's been tweaked no end of times in the intervening 300 years, but almost always in an attempt to make it fairer for the common man.

The modern legislation was largely introduced by Asquith's Liberal government who also removed the House of Lords right to veto Parliament and to oppose manifesto promises giving more effective power to voters, introduced the state pension for all working Britons freeing us from the workhouse and introduced unemployment benefits. This is a progressive piece of policy at its very root and has almost always been championed by progressive and left-leaning governments.

On Laszlo's point that the current policy is still able to be circumvented by the super-rich; I see that as no reason to scrap it altogether, but only to try and close the loopholes which allow people to evade tax, which I absolutely agree are too easy to find for those with outrageous means. Same reason I don't think Vodafone and Starbucks skipping out on their Corporate Tax bill is reason for all businesses to stop paying tax. Also, given the state of upkeep of a great deal of our Non-National Trust estates and stately homes, I think it is demonstrably effective at hindering old-style dynasties. It's not perfect by a long shot (what is? We could give up politics if we ever reached perfection!), but it's a hell of a lot better than it once was.

[Muncey]

Dying is costly business.

[Burlish]

Chatting s••t, apologies

[DRTY]

I think inheritance tax is kind of fucked up (as you've paid your taxes on it already; presumably). There are ways around it of course but for average joes there isn't really. People used to just sell their houses to their kids for say £1. Or just give them money before they die. Neither of which you can do now, you can only 'give' someone £3,000 of gifts/money pa before it's taxed (gift tax), and it's not legal now to sell a house under a certain threshold below market value.

Having said all that I do think there should be some inheritance tax, but not 40%, even if that 40% is over 325k.

If you've worked hard all your life and paid off a nice house, you should be able to leave that house to your children without the worry of them having to sell it just to pay a tax bill.

[scspkr99]

If you inherit £374,999 you don't have to pay tax.

If you inherit £375,001 you have to pay £150k tax.

Have a word

Nah the 40% is the rate of tax you pay on what you inherit over the threshold. If you inherit 375,001 you have to pay 40p.

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

Most estates don't have to pay Inheritance Tax because they're valued at less than the threshold (£325,000 in 2013-14). The tax is payable at 40 per cent on the amount over this threshold

Oh it's 325k it seems by this in any case you never receive less than you would if you inherited less.

[Pedro Sánchez]

I'm with Mag on this, the future generations need to know what it is like to start with nothing and earn something. Securing higher education for your offspring is one thing but what are you doing to teach them the value of society if you are just gonna give them everything you earned. That's why we have a government full of MPs who don't know what real working life is, dictating how the working man and woman should live, they could choose what they wanted to do in life because nothing was to be lost by fucking up and they could stroll into chosen profession with money as a catalyst, shit goes tits, go back to Daddy's accountant. Same for the majority of the law profession, media, finance and it's even creeping into the sports world now.
My money is getting left to cats.

[scspkr99]

I'm often surprised by people who think it's appropriate to tax the money you earn but not the money you don't. It seems I have a greater entitlement to the fruits of my labour than I do to someone elses? I know tax may already have been paid on it we have multiple tax points. It's paid on the goods we buy with money that's been taxed. It's paid on the alcohol we drink, the cigarettes we smoke and the petrol we put in the cars we pay road tax for. If we accept tax at different points I don't know why money we inherit should be excluded.

[wub]

If you inherit £374,999 you don't have to pay tax.

If you inherit £375,001 you have to pay £150k tax.

Have a word

Nah the 40% is the rate of tax you pay on what you inherit over the threshold. If you inherit 375,001 you have to pay 40p.

http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

I stand corrected