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View Poll Results: Is Inheritance Tax Right?

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  • Yes

    12 25.53%
  • No

    35 74.47%
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  1. #21
    Contributor theundeclinable
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    Quote Originally Posted by NoelC
    The beneficiaries have done nothing to earn this windfall inheritance and should be taxed at full rate.
    Regardless of the pros and cons the taxation system is inconsistant and open to debate. You agree and I don't - and denying that wealth accumulation isn't evidence of success then I don't really know what else is?! Most people would assume that's a logical deduction although there is a degree of natural appreciation but this goes for most things - the inheritance tax limit should take that into account rather than being an inflexible line in the sand.

    I don't quite understand the quote above - I pay taxes on the money I earn, I pay tax on the money I inherit (and do nothing to earn it) yet am exempt from tax on gambling income (which again I do little to nothing to earn it).

    And yes, it is multiple taxation. Lets say for instance I buy a painting for £1m (inc tax) the government get approx £200k tax from it. I die, pass it onto my son who has to pay £280k tax to inherit it, then he dies his son has to pay a further £280k tax to inherit it etc etc so while the original item only has a value of £1m in 3 generations over £500k has been shelled out in tax! How is that fair?!

  2. #22
    Contributor Spider
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    It depends where the money in the estate came from as to whether there's double taxation or not. If it arose from employment, then there is absolutely enormous double taxation.

    Consider someone approaching retirement, with assets already over the Inheritance Tax threshold. For every £100 they earn, a higher rate taxpayer would pay 40% Income Tax and 1% National Insurance. That also increases their estate by £59, so the potential Inheritance Tax liability on death increases by £23.60.

    So for every £100 they earn, their beneficiaries would end up with only £35.40. On the other hand the Government ends up with a staggering £77.40 out of every £100 gross pay (£40 Income Tax, £1 employees NI, £12.80 employers NI and £23.60 Inheritance Tax). That's a massive disincentive for those approaching retirement age to continue working.

    I think the Inheritance Tax rules need turning around, so that instead of the tax being based on the value of the estate of the deceased, it should be based on the total inheritance received by the beneficiaries. Every person should have a lifetime gifts allowance which they can use to receive taxfree inheritances over their lifetime. Once they have received in excess of this limit, then any extra amounts they inherit would be taxable. This should encourage the rich to spread their wealth around more. The thinner the money is spread, the less IHT would be due.

    Also I think the rates would be better graduated. At the moment the rate jumps from 0% straight to 40%. In my view it would be fairer to graduate the rates, so that those over the threshold, but not by much, pay a lower rate of say 20%, and only the very wealthy pay 40%.

  3. #23
    Contributor mwba16573
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    I'm only willing to support a reduction in inheritance tax if the corresponding increase in other taxes to balance the books results in my overall tax bill going down.

    If my overall tax bill is going to increase I'd rather pay some IHT.

    My partner & I have already put a Nil Rate Band Discretionary Will Trust in place thereby safeguarding £570K from IHT and saving £114K in tax. Next year & the year after these figure increase.

  4. #24
    HB
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    Moderator HB will become famous soon enough
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    Quote Originally Posted by Chadwick
    In practice this makes little odds to most of us because usually the main asset (property) is under joint ownership, so only half of it is considered as the estate of the deceased anyway.
    There are two different ways of having a property owned by two people: Joint Tenants and Tenants in Common.

    With the first option, the half of the property automatically passes to the spouse on death.

    With the second option, each spouse can state in their will how their half of the property be dealt with on their respective deaths in their will. There are still ways around the rules to make use of both person's 'nil rate band' through use of discretionary trusts.
    Sterling Forever.

  5. #25
    Rpoints Elite qwerty321
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    I thought this thread had been deleted! Thanks for the mod (whoever it was) for deleting the offensive comments.

    I believe that Inheritance tax should be lowered at least to something like 25% and more taxes placed on demerit goods such as Alcohol, tobacco etc. This will also benefit the consumers of these goods by helping them live longer and places less strain on health services!

    Although, the EU legislation about to be passed will only mean that UK firms lose out.

  6. #26
    Contributor member58848
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    Quote Originally Posted by Spider
    So for every £100 they earn, their beneficiaries would end up with only £35.40. On the other hand the Government ends up with a staggering £77.40 out of every £100 gross pay (£40 Income Tax, £1 employees NI, £12.80 employers NI and £23.60 Inheritance Tax). That's a massive disincentive for those approaching retirement age to continue working.
    Correct me if I'm wrong, however, don't National Insurance contributions go towards benefits such as State Pension. Admittedly its not alot, however, its not like the government keeps that portion.

    For me, I am in the fortunate position where inheritance tax is going to affect me. I say fortunate, because this is money and assets which I have not earned - irrespective of whether tax has been paid on them or not - currently, they are my parents, not mine.

    So I am broadly in favour of inheritance tax. Without it, money would continue to stay with the better off. If your family already has money, then the children are more likely to get better opportunities in life, like education, etc. They will then be in a position to get better jobs to make more money. Without, some system to redistribute money, then the gap between rich and poor will get bigger. As I said, I am broadly in favour of inheritance tax.

    However, I do believe that significant improvements can be made to the system. For instance a tiered structure, instead of the sudden 40%... 20% between £275k - £500k and 40% above? Also, I think there must be a better way to avoid grieving relatives having to sell homes to pay the tax bills immediately upon death.

  7. #27
    Contributor theundeclinable
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    Talking to my better half who has got a Juris degree suggests that it is usually the worse-off better-off folk who tend to suffer most.

    The people who inherit comparably small amounts (<£500k) get hit very hard by the tax whilst the super rich can hire legions of accountants / lawyers / tax specialists to get them out of paying (or paying as little as possible) tax. So although in theory it should tax the rich it actually hits 'middle' britain far harder.

    A tiered suggestion, raised more than once above, would be a much more suitable solution.


 

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