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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 Tizzy on Friday, 23 February 2007 23:15:34

It is a ridiculous tax. For now, implore your parents to get advice from an informed accountant.

Posted by canvas on Friday, 23 February 2007 23:17:28

People need to get their parents to give them a huge amount of money (if possible) - and if the parents live for another seven years then you don't have to pay tax. It's a pro rata system for in between. Sad but true.

 

Comment edited by canvas on Friday, 23 February 2007 23:21:57

Posted by tomamos on Friday, 23 February 2007 23:17:43

Well said John! I can't agree more.

PS You can vote for your own post you know!

Posted by Tizzy on Friday, 23 February 2007 23:27:56

Not true, canvas, unfortunately. There is an annual exemption up to £3k per child, though they can make an additional £5K if their child gets married.

EDIT: Sorry, I should not have said 'Not true...' if you believe £3K per year to be a 'huge' amount. Very subjective of me.

 

Comment edited by Tizzy on Saturday, 24 February 2007 00:53:12

Posted by Johnrulez on Saturday, 24 February 2007 01:56:34

Thanks for your comments so far and I would love to hear the future PM's opinion on this

Posted by canvas on Saturday, 24 February 2007 10:58:48

Tizzy - I promise you it can be any amount of money - and it is exempt from inheritance tax after 7 years. It's a PET.

'Potentially exempt transfers'
If you, as an individual, make a gift in any of the situations described below and it isn't covered by one of the exemptions already described, it is known as a 'potentially exempt transfer' (PET). A PET is only free of Inheritance Tax if you live for seven years after you make the gift.


http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/InheritanceTaxEstatesAndTrusts/DG_10010612

http://66.102.9.104/search?q=cache:bxaMMXtjv3UJ:www.finance-glossary.com/terms/potentially-exempt-transfer.htm%3FginPtrCode%3D00000%26id%3D1149%26PopupMode%3Dno+inheritance+tax+PET+potentially+exempt+transfer&hl;=en&ct;=clnk&cd;=1≷=uk

 

Comment edited by canvas on Saturday, 24 February 2007 14:48:32

Posted by kozmicstu on Saturday, 24 February 2007 11:30:20

Can you say 'spam', canvas?

Tut Tut Tut

There are a number of not-exceptionally-complicated ways of getting around inheritance tax, but the system needs reforming, thanks again to our good friend Mr Brown and his fast fingers. If nothing else, simply raising the threshold by a reasonable amount - in line with property prices, perhaps, might suffice

 

Comment edited by kozmicstu on Saturday, 24 February 2007 11:34:45

Posted by canvas on Saturday, 24 February 2007 11:32:32

changed. happy? LoL :)

 

Comment edited by canvas on Saturday, 24 February 2007 15:06:16

Posted by kozmicstu on Saturday, 24 February 2007 11:36:33

canvas the problem is not the information, it's the fact that it is large amounts of text copied from an external site. Surely you see the difference? Wouldn't it be better to provide a link, a reference and a summary?

I AM interested, it's just that being interesting spam doesn't stop it being spam...

 

Comment edited by kozmicstu on Saturday, 24 February 2007 11:37:18

Posted by canvas on Saturday, 24 February 2007 11:39:30

changed - happy? :)

 

Comment edited by canvas on Saturday, 24 February 2007 15:05:52

Posted by kozmicstu on Saturday, 24 February 2007 11:47:21

I'm not telling you how to write your comments, I'm pointing out that that particular comment is decidedly spammy.

Anyway, back to the point at hand... Before you die, take all your cash out the bank and put it in a series of large black bin liners. Then sell your house and live with your children, putting the money from the sale into the more bin liners.

Then have them take a trip to Las Vegas for the wake. Problem solved :-)

Posted by spivver on Saturday, 24 February 2007 12:15:30

The recent problems with IHT have been largely brought about by the huge increases, far above both inflation and the miserly de-minimus increases givern by that greedy tax grabber Brown, such that what was once a tax on the "rich" is now a tax on the normal hardworking prudent people of this country.

There is an even easier solution than Kosmicstu's solution, and that is to exempt the principal private residence of people, much like this is already exempted from CGT. Easy.

The solution which is oft put around by so called " Financial Advisers", reflected in some of the above comments, is not a good idea, and I certainly advise my own elderly clients not to go just giving away their money, assets and, most importantly, their house. As quite rightly stated above, a home does not fall out of IHT if it is given as a gift with reservation, i.e. "I'll give my children my house only on condition I can live in it for the rest of my natural life". No - for it to be gifted properly, the day after I gift it my children could legally turn round and say "Thanks Dad, now please leave, we are putting it on the market". Gifts should only be made of monies (and things like stocks and shares) which the gifter knows he/she will never need in their lifetime. But how do you know how much longer you will live, and hence what you may one day need? See the problem?? Never never gift your house. Oh, there are fancy schemes involving trusts which have been drawn up by lawyers, but the Revenue can and are attacking some of these schemes in their attack against "tax avoidance", brought on by directives of this greedy, corrupt and immoral government we are saddled with. Nowadays, such is this corrupt government's attitude, that these attacks can be very much retrospective.

The other problem which these clowns in power have ill thought out is this. Transfers on death between natural spouses (man & woman) are exempt, quite rightly, from IHT. Now that Blair has given in to all the 'gays' and lesbians, elevating their unions to the same level as the natural union I have enjoyed for 29 years with my wife, they now also enjoy the same right of IHT transfer. OK, some of you may say, so what?? Well, imagine how two brothers, sisters or other family members who have bought a house to share and live in, must feel if one should die and the surviving partner is then faced with having to pay IHT or, if unable, to have to sell his/her home. This is exactly the situation being faced by two 80 year old sisters in the UK. And this is modern Britain??

 

Comment edited by spivver on Saturday, 24 February 2007 13:54:19

Posted by DaveGould on Sunday, 25 February 2007 04:18:03

What exactly makes a tax immoral? A tax can only be immoral if it unjustifiably encourages people to do immoral things.

So what if Inheritance Tax is a double tax? So is VAT.

The big question is why should children of rich people be given extra opportunities compared to children of poor people?

IMHO, Inheritance Tax is a relatively moral tax compared to tax on investment interest etc.

Posted by Graham on Sunday, 25 February 2007 16:21:08

DaveGould:

> The big question is why should children of rich people be given extra opportunities compared to children of poor people?

Back in 1981, just before my father died, he and my mother bought a 3 bed flat in Clifton, Bristol for about £25,000.

Similar flats in that area now sell for around £300,000. My mother is most certainly not "rich", but when she dies, my sister and I will have to pay IHT on her property simply because of the appreciation of property values in that area. And please don't forget that there will also be Stamp Duty payable when we sell the flat.

Who benefits? Why, the Treasury, of course!

Posted by DaveGould on Monday, 26 February 2007 02:04:59

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?

If anything you make a stronger case for inheritance tax - to even out unfair re-distributions of wealth.

I'm not a big fan of redistribution, mind you. Poverty is a way of life more than a lack of money in Britain. But I'd cut most taxes before I cut inheritance tax.