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Current stance on inheritance tax, and any changes in the future?

Posted by Johnrulez on Friday, 23 February 2007 23:09:26

Inheritance tax is an immoral form of taxation that penalises hard work and thrift. By raising a 40% levy on earned assets, it is also effectively double taxation. It frequently piles financial misery and distress on families already suffering the pain of bereavement; that is nothing less than grave robbery.

Over the last decade, millions of households have been drawn into the death duty trap by steadily rising property prices. Often, people are forced to sell their family homes to pay the duty. The burden of death duty largely falls not on the super rich, who can often afford to use tax avoidance schemes, but on millions of hard-pressed families struggling on modest incomes. For all the anguish it causes, inheritance tax raises a tiny proportion of the Government's revenue, less than one per cent. It is inherently unfair and should therefore be abolished outright.

Please inform me of your views on the topic, and your parties aims and objectives to combating on changing it in the future when you come to power. Or even a higher amount placed before inheritance tax is effective - we all know about the fast rising house prices.

Just a last note, my family has been affected by this stealth tax and I am sure lots reading this will know of someone who has also been affected by it.

I have heard of young siblings getting their parents house and having to sell it as a 40% inheritance tax was in their hands days after the funeral of the person who left the house to them. This is madness and most people will have to do this under stress and grievance.

Thanks for your time

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Posted by canvas on Monday, 26 February 2007 06:53:26

DaveGould, I think your statement is a bit harsh. Look, the majority of people who inherit relatively large sums of money these days do so because their parents have left them a property. Chances are these parents worked hard all their lives to make sure their children would be looked after. You shouldn't begrudge people their family home.

Inheritance tax should have a threshold of around £400,000. before it starts to make any sense in 2007.

I actually think inheritance tax is one of the worst and most unfair taxes going. I would like to think that I am a fair minded person as well.


 

Comment edited by canvas on Monday, 26 February 2007 06:57:51

Posted by Graham on Monday, 26 February 2007 14:07:07

DaveGould:

> So explain to me why you and your siblings deserve an inheritance of ~£290,000 when 50% of everyone else inherits less than £3,500?

Certainly, just as soon as you explain to me why Gordon Brown deserves to take a big chunk of it instead and if you think it will help "redistribute wealth" or "cut taxes" then you're deluding yourself.


Posted by DaveGould on Monday, 26 February 2007 18:11:25

"Chances are these parents worked hard all their lives to make sure their children would be looked after."

So we should scrap inheritance to avoid disappointing well-off parents with unrealistic expectations?

What about all the parents who worked hard all their lives yet didn't end up with a £300k house?

Shouldn't their children be looked after too?

"Certainly, just as soon as you explain to me why Gordon Brown deserves to take a big chunk of it instead and if you think it will help "redistribute wealth" or "cut taxes" then you're deluding yourself."

Important question, and I'll add more to what I already said.

It would be nice if rich people gave as big a proportion of their income to charity as poor people do. But they don't, they give 4 times less.

I'm going to assume you agree that disadvantaged people in society should have their basic needs met eg free wheelchairs.

Government has to cover where popular charities don't.

OTOH, Govts are terribly wasteful of money, especially Labour ones. During the Leadership Question Time, I asked Blair if the country had anything to show for £150 billion thrown at the NHS and schools. That was in 2005 and the NHS is still haemorraging £30+ billion a year in waste.

These are staggering sums of money. Everyone could afford to go private for that.

So I support Nigel Lawson's approach to both government spending and tax policy. Shame about his position on green taxes...

Posted by Graham on Monday, 26 February 2007 18:43:41

DaveGould:

"What about all the parents who worked hard all their lives yet didn't end up with a £300k house? Shouldn't their children be looked after too?"

So those who have been thrifty or invested wisely should pay for those who have pi$$ed away their money, not saved or just been unlucky?

This sounds like people suggesting that the taxpayer should bail out those who lost money when the Farepack Christmas Savings Scheme collapsed. There was a lot of emotional rhetoric about "it's for Xmas" or "think of the children", but the basic fact is that they invested in a scheme that wasn't regulated or insured and for them to get money from the taxes of others because of this is simply wrong.

"It would be nice if rich people gave as big a proportion of their income to charity as poor people do. But they don't, they give 4 times less."

This is irrelevant and erroneous. Many poor people only "give to charity" because part of the money they pay for a lottery ticket (when they are foolishly trying to gamble their way out of their situation) goes to charity. Not for nothing is the Lottery called a tax on people who don't understand statistics.

"I'm going to assume you agree that disadvantaged people in society should have their basic needs met eg free wheelchairs."

Of course, but that's not the same thing.

"Government has to cover where popular charities don't."

That's what we have the NHS for. Unfortunately, as you point out, it has been buggered about by so many successive governments and money from social security syphoned off by the Treasury so often that it's now in a right mess. But I don't see why IHT should be used to cover that shortfall.

Posted by canvas on Monday, 26 February 2007 20:31:05

Inheritance tax clearly punishes those who save thorughout their lives to ensure their family are looked after - yet those people who spend all they have on themselves will leave nothing for their family or for the state.

It shouldn't be about who is deserving and who isn't. Inheritance tax was supposed to be for the extremely wealthy - this is now an outdated view. It's rising house prices that is the reason for so many more estates coming into the IHT trap/bracket. This threshold is very easily reached when you take into account pension benefits and life policies. The current threshold is outdated and wrong.

There should be legislation to raise the inheritance tax bracket inline with inflation. The Government should make a commitment to link the inheritance tax threshold to house price inflation in the future. If the threshold for inheritance tax had been raised in line with house price inflation, it would now be £430,000.


"The amount of inheritance tax revenue raised is small compared with other taxes. During 2005-06, inheritance tax was less than 1 per cent of total tax receipts. At present, only 38,000 taxpayers pay IHT, although the number of taxpayers who have to produce IHT returns is much higher.

Its proponents believe that it is somehow wrong for people to inherit large amounts of wealth and that therefore the state should take away a large proportion of it. Having said that, socially I feel prepared to accept the principle of inheritance tax. This tax used to affect the wealthy, but it is now affecting many property owners, which was not its original intention."

http://www.publications.parliament.uk/pa/ld200607/ldhansrd/text/70201-0018.htm




 

Comment edited by canvas on Monday, 26 February 2007 20:31:56

Posted by DaveGould on Tuesday, 27 February 2007 18:10:54

"This sounds like people suggesting that the taxpayer should bail out those who lost money when the Farepack Christmas Savings Scheme collapsed."

Not at all. Only people who literally cannot support themselves should be paid basic benefits.

"This is irrelevant and erroneous. Many poor people only "give to charity" because part of the money they pay for a lottery ticket (when they are foolishly trying to gamble their way out of their situation) goes to charity. Not for nothing is the Lottery called a tax on people who don't understand statistics."

I'd have to look it up. The same pattern is shown across all capitalist societies though.

"That's what we have the NHS for. Unfortunately, as you point out, it has been buggered about by so many successive governments and money from social security syphoned off by the Treasury so often that it's now in a right mess. But I don't see why IHT should be used to cover that shortfall."

Somebody has to. Why not people receiving unearned windfalls?

Posted by canvas on Monday, 26 February 2007 20:31:05
"Inheritance tax clearly punishes those who save thorughout their lives to ensure their family are looked after"

That's like saying death punishes people who want to live 200 years.

"It shouldn't be about who is deserving and who isn't."

Why not?

"Inheritance tax was supposed to be for the extremely wealthy"

So was income tax.

 

Comment edited by DaveGould on Tuesday, 27 February 2007 18:42:16

Posted by Graham on Tuesday, 27 February 2007 19:18:28

DaveGould:

> Only people who literally cannot support themselves should be paid basic benefits.

Which doesn't answer my question "So those who have been thrifty or invested wisely should pay for those who have pi$$ed away their money, not saved or just been unlucky?"

> "I don't see why IHT should be used to cover that shortfall." Somebody has to. Why not people receiving unearned windfalls?

If you're going to use that as an argument, you'd be better off targetting it at big businesses and banks, many of which have been coining it in at the expense of their customers and then declaring huge profits or giving massive pay-rises to executives who very probably haven't really earned them.

Posted by GreedyGordon on Thursday, 08 March 2007 19:01:59

My parents never had a holiday abroad, didnt smoke, didnt drink and put all their hard earned savings into their home, sadly as both passed away inheritence tax became due and had to paid within six months. Don't forget there is additional interest levied if payment is "late". Neither my parents claimed a single penny in unemployment or other benefits but in death they are paying for all those who cant do without a drink, a smoke, or on permanent holiday because they're too lazy to get a job.



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