This 50p tax rate
Comments
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IHT often goes against one main principles that mark out a tax as fair - ability to pay (as has been mentioned before here).
BTW: there are several perfectly legit ways of reducing IHT. Anyone who has 2 living parents with a house that might be worth a bit can do this very easily and it often also reduces the amount the council can get their grubby little hands on if your parents end up in care. PM me for details
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
WTF!Rick Chasey wrote:gtvlusso wrote:Freind of my folks was in the IHT conundrum:
He is a schoolteacher in Worcestershire; inherits £3M georgian end of Terrace family home next to Westbourne Park Tube Station in Chelsea. Home has been in family since late 1800's.
Has to remortgage his own home to pay IHT and leave chelsea to his 2 kids - doesn't get to retire when he planned to. Has no savings at all.
Is renting out the property to a Banker at the moment to make ends meet.
Why not sell the house?
What about the emotional attachment he has with the house given that it has been in his family for shy on 200 years.
This is what sickens me about the left. On one hand they're all support [poor] families, state benefits blah blah blah. The minute a family is able to live without the need of state support they become the enemy and work to relinquish that family of any personal wealth or the possessions they've managed to aquire.
I need a time out.Food Chain number = 4
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there are several perfectly legit ways of reducing IHT
Shurley your not suggesting immoral tax planning to avoid an immoral tax.....“New York has the haircuts, London has the trousers, but Belfast has the reason!0 -
rjsterry wrote:Well above a threshold, you have to declare it, so yes it is taxed - unless he gives it to you in a big brown envelope stuffed with fifties, it will show up in your bank account.
http://www.hmrc.gov.uk/cgt/intro/gifts-inherit-divorce.htm
Isn't that link to do with CGT payable by the donor of a gift? I have shares that I bought for £1,000. When they're worth £50,000 I give them to my kids. If I had sold them I would have been on the hook for CGT on the £49k gain. I think the principle is that a gift by me counts the same as a sale by me for CGT purposes - I can't dodge my CGT liability by giving things away.
The recipient takes the shares at £50k, and then pays CGT on the profit if he disposes of them at over £50K. If the transaction concerns cash, I don't think there's a CGT issue for the donor, but the recipient has to pay income tax on the value of the cash when he receives it (unless an exemption applies - eg between spouses, or small gifts from parent to child).
At least, that's what I remember as the outline when I looked at this years and year ago. Perhaps it has all changed now.0 -
jamesco wrote:
It's a bit hard to have sympathy for someone who has received a massive inheritance and then chooses penury. Tradition is all well and good, but it sounds like the house owns him, rather than the other way around... Spend the money, enjoy it!gtvlusso wrote:Freind of my folks was in the IHT conundrum:
He is a schoolteacher in Worcestershire; inherits £3M georgian end of Terrace family home next to Westbourne Park Tube Station in Chelsea. Home has been in family since late 1800's.
Has to remortgage his own home to pay IHT and leave chelsea to his 2 kids - doesn't get to retire when he planned to. Has no savings at all.
Is renting out the property to a Banker at the moment to make ends meet.
Well quite. My parents still live in the house I grew up in and which they rennovated from a wreck. I know it so well that I can probably walk around it safely with my eyes shut. But they will be selling it when they retire in a year or so, and that will be the last I see of it. It'll be sad, but there you go.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
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Part of the anti-growth coalition0 -
Rick Chasey wrote:gtvlusso wrote:Freind of my folks was in the IHT conundrum:
He is a schoolteacher in Worcestershire; inherits £3M georgian end of Terrace family home next to Westbourne Park Tube Station in Chelsea. Home has been in family since late 1800's.
Has to remortgage his own home to pay IHT and leave chelsea to his 2 kids - doesn't get to retire when he planned to. Has no savings at all.
Is renting out the property to a Banker at the moment to make ends meet.
Why not sell the house?
Why should he have to?0 -
DonDaddyD wrote:
And there are those that claim that inheritance tax isn't immoral. :roll:Torvid wrote:suzyb wrote:Am I right in thinking that even if you still live in that home you could be forced to sell it if you don't have the spare cash to pay the IHT.
I think if your still living in the home it would be wise to move the house to your name, I think this needs to be done a few year before the death of the parent but it was advised to my parents to do it sooner rather than latter when they where making out wills.
And it's far more complex than as set out. If you "gift" the house away, you can't live in it any more. So you have to live somewhere else. Or you have to pay a rent for it - which pensioners (who may be asset "rich" but income poor) may not be able to do. Not a great solution.0 -
rjsterry wrote:jamesco wrote:
It's a bit hard to have sympathy for someone who has received a massive inheritance and then chooses penury. Tradition is all well and good, but it sounds like the house owns him, rather than the other way around... Spend the money, enjoy it!gtvlusso wrote:Freind of my folks was in the IHT conundrum:
He is a schoolteacher in Worcestershire; inherits £3M georgian end of Terrace family home next to Westbourne Park Tube Station in Chelsea. Home has been in family since late 1800's.
Has to remortgage his own home to pay IHT and leave chelsea to his 2 kids - doesn't get to retire when he planned to. Has no savings at all.
Is renting out the property to a Banker at the moment to make ends meet.
Well quite. My parents still live in the house I grew up in and which they rennovated from a wreck. I know it so well that I can probably walk around it safely with my eyes shut. But they will be selling it when they retire in a year or so, and that will be the last I see of it. It'll be sad, but there you go.
And that is their choice. To have that choice stripped from them (and to a degree you) by a tax demand from the state is unacceptable.
There is a presumption that families owning homes for generations must be a bad thing. Well some things you just can't value - and sentimental attachments to homes is one of those things.0 -
Greg66 wrote:rjsterry wrote:Well above a threshold, you have to declare it, so yes it is taxed - unless he gives it to you in a big brown envelope stuffed with fifties, it will show up in your bank account.
http://www.hmrc.gov.uk/cgt/intro/gifts-inherit-divorce.htm
Isn't that link to do with CGT payable by the donor of a gift? I have shares that I bought for £1,000. When they're worth £50,000 I give them to my kids. If I had sold them I would have been on the hook for CGT on the £49k gain. I think the principle is that a gift by me counts the same as a sale by me for CGT purposes - I can't dodge my CGT liability by giving things away.
The recipient takes the shares at £50k, and then pays CGT on the profit if he disposes of them at over £50K. If the transaction concerns cash, I don't think there's a CGT issue for the donor, but the recipient has to pay income tax on the value of the cash when he receives it (unless an exemption applies - eg between spouses, or small gifts from parent to child).
At least, that's what I remember as the outline when I looked at this years and year ago. Perhaps it has all changed now.
That's what I was referring to, although it may not be exactly the right page of the HMRC site.1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
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Part of the anti-growth coalition0 -
I don't think there is any tax to pay by anyone on a cash gift, unless the donor fails to live for 7 years in which case it will still form part of his esate for IHT purposes.Greg66 wrote:I don't think there's a CGT issue for the donor, but the recipient has to pay income tax on the value of the cash when he receives it (unless an exemption applies - eg between spouses, or small gifts from parent to child).
.0 -
DonDaddyD wrote:
WTF!Rick Chasey wrote:gtvlusso wrote:Freind of my folks was in the IHT conundrum:
He is a schoolteacher in Worcestershire; inherits £3M georgian end of Terrace family home next to Westbourne Park Tube Station in Chelsea. Home has been in family since late 1800's.
Has to remortgage his own home to pay IHT and leave chelsea to his 2 kids - doesn't get to retire when he planned to. Has no savings at all.
Is renting out the property to a Banker at the moment to make ends meet.
Why not sell the house?
What about the emotional attachment he has with the house given that it has been in his family for shy on 200 years.
This is what sickens me about the left. On one hand they're all support [poor] families, state benefits blah blah blah. The minute a family is able to live without the need of state support they become the enemy and work to relinquish that family of any personal wealth or the possessions they've managed to aquire.
I need a time out.
Maybe I'm different, or maybe I'm being unrealistic about my feelings towards my 'rents place if I inherited it.
I figure it makes sense. My earnings and lifestyle couldn't stretch to living where my 'rents do, so it makes sense not being able to keep it.
I don't think people who earn a lot are 'enemies' of the state. Taxation isn't a punishment. It's a necessity. As I've said before, the burden needs to be placed somewhere, and it's useful for a little social engineering.
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.0 -
<sniff>W1 wrote:... Well some things you just can't value - and sentimental attachments to homes is one of those things.
W1, what is going on? Us lefty liberals are supposed to be the touchy-feely ones.
Sorry, this is a better link for the cash gifts question.
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
rjsterry wrote:
<sniff>W1 wrote:... Well some things you just can't value - and sentimental attachments to homes is one of those things.
W1, what is going on? Us lefty liberals are supposed to be the touchy-feely ones.
Sorry, this is a better link for the cash gifts question.
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
Woah, touchy feely doesn't mean sentimental - especially when it's with inanimate material objects.
Speak for yourself there rjsterry!0 -
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.Food Chain number = 4
A true scalp is not only overtaking someone but leaving them stopped at a set of lights. As you, who have clearly beaten the lights, pummels nothing but the open air ahead. ~ 'DondaddyD'. Player of the Unspoken Game0 -
DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
That's not the enemy.
I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.0 -
Lucky that a family member died and was kind enough to leave him something, anything. So lucky in fact that the Government should tax it so that everyone else benefits from his loss.Rick Chasey wrote:DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
That's not the enemy.
I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.Food Chain number = 4
A true scalp is not only overtaking someone but leaving them stopped at a set of lights. As you, who have clearly beaten the lights, pummels nothing but the open air ahead. ~ 'DondaddyD'. Player of the Unspoken Game0 -
DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
I think that the point is: Said schoolteacher has entered financial hardship to keep what is essentailly his birthright. The generation sof his family have worked hard to keep the house and paid tax throughout their lives.
Admittedly, the house required some restoration to give it the full value.
He has kept the house as both his kids plan on moving to London for work, so it seems appropriate. I can see that he would not want to have to be the part of the family that sells the place just to keep Mr Taxman happy.
But there you go - my folks who have worked all their lives and paid their tax up front, will also pay some tax in death and in fact may leave me with a rather large bill! Would you want that hanging over you?
I don't think the comment regarding the disabled person is relevent in the discussion as the 2 issues are not linked directly.0 -
rjsterry wrote:
<sniff>W1 wrote:... Well some things you just can't value - and sentimental attachments to homes is one of those things.
W1, what is going on? Us lefty liberals are supposed to be the touchy-feely ones.
Sorry, this is a better link for the cash gifts question.
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm
That link doesn't answer the question.0 -
If it's an immoral tax the surely the planning to mitigate it must be very moralTailWindHome wrote:there are several perfectly legit ways of reducing IHT
Shurley your not suggesting immoral tax planning to avoid an immoral tax.....
On a more pragmatic note, it is also to a reasonable extent an avoidable tax. My choice was whether the state gets a large chunk of my folks assets or whether I get them which is what they want and have worked for. And this was not principally about IHT for my family as they are not worth that much - it's more about potential care home fees. Guess which choice I took."I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Rick Chasey wrote:DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
That's not the enemy.
I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
That's because you presumably have nothing of worth (be it financial, or of family significance) to inherit.
Some people have this quaint idea that they owe it to their families, previous and future, to maintain ownership of their homes to pass on. Some have been doing that for hundreds of years. Sometimes that can be a significant financial burden, regardless of the on-paper value. Being taxed on an asset that you own, but could not afford to buy, cannot (and should not have to) sell, and which you have made other sacrifices to keep, is something which I view as unacceptable. But that is something that I doubt you could understand.0 -
DonDaddyD wrote:
Lucky that a family member died and was kind enough to leave him something, anything. So lucky in fact that the Government should tax it so that everyone else benefits from his loss.Rick Chasey wrote:DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
That's not the enemy.
I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
The government isn't taxing his loss, the government is taxing his gain.
In this case an asset worth £3M“New York has the haircuts, London has the trousers, but Belfast has the reason!0 -
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W1 wrote:Rick Chasey wrote:DonDaddyD wrote:
There you go, rich people are the enemy.Rick Chasey wrote:
I'll be honest, I have less sympathy for the guy who inherits a £3m house, however long the family has had it, than the disabled guy I know who just lost a fair chunk of his state disability income > and that's not just because I know the disabled guy.
That's not the enemy.
I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
That's because you presumably have nothing of worth (be it financial, or of family significance) to inherit.
Some people have this quaint idea that they owe it to their families, previous and future, to maintain ownership of their homes to pass on. Some have been doing that for hundreds of years. Sometimes that can be a significant financial burden, regardless of the on-paper value. Being taxed on an asset that you own, but could not afford to buy, cannot (and should not have to) sell, and which you have made other sacrifices to keep, is something which I view as unacceptable. But that is something that I doubt you could understand.
Pfft, how presumptuous.
Suffice to say, it's happened to a side of my family and no-one seems either upset or bitter about it. In short the tied up wealth was liquidated.0 -
My take? If GTV Lusso's mate is so emotionally attached to the house, he could always live there and sell his own home. Homes are for living in. I'm not a fan of multiple property ownership full stop. But anyway, he has inherited this place and, what, plans to leave it to his kids as part of their inheritance? Why not just sell it and give them the money. Sounds very unlikely they will be living there themselves. I just don't see why this guy expects sympathy. He has inherited a significant asset, has chosen to keep that asset and as a result is having to fund the tax in other ways. Now if it was his home, I might be a bit more sympathetic, but if he's just keeping it as a rental property before handing it down to the next generation...
Also, birthright? Seriously? He (and most of us) got lucky enough being born into wealthy western society, don't start sobbing because you don't get the entire proceeds of your £3m inheritance.
@ DDD, you aren't half coming out with some, erm, "interesting" arguments on this thread...0 -
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@ DDD, you aren't half coming out with some, erm, "interesting" arguments on this thread...
I do think my points are rather valid:
To recap:
Inheritance is a gift. It is not income, salary, pension, profit etc. It should be treated/taxed as such, a gift. If it is subject to Capital Gains Tax, which isn't taxed at the point of death, fine. But to tax it solely as 'Inheritance' IMO is wrong. Seems like you are being punished because you were lucky enough to have someone leave you something at the end of their life (as a gesture of goodwill more than anything else - essentially they are taxing goodwill). No one who is for inheritance tax has put forward an argument I can even conceive of as being palatable.
It is immoral and unfeeling. That you should be brutally taxed at a time of bereavement is wrong. Any tax that can potentially force you to sell your possessions or dramatically change the quality of you life for the worse (when in principle you should have gained) is immorally wrong.
Morality is key in guiding the validity and justification behind legislation/laws. There for morality IMO is a factor in deciding whether inheritance tax is 'right, just and fair'.
What else...?
Whether the inheritance is 'earned/unearned' is subjective and cannot be qualified as anything less. If the beneficiary of the inheritance is a personal decision then so should be the rationale of whether it is earned or unearned. It should not be down to outsiders to determine whether someone has 'earned' their inheritance. The very notion is sickening.
Just keeping the pressure up. Keeping it at just below boiling but higher than simmering, it's a skill.Food Chain number = 4
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Rick Chasey wrote:I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
I'd be (genuinely) interested in your views on this.
I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.
If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.
Fair?0 -
Greg66 wrote:Rick Chasey wrote:I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
I'd be (genuinely) interested in your views on this.
I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.
If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.
Fair?
What's fair? That he has to sell the house?
It'd be the same for everyone in the same situation...0 -
Greg66 wrote:Rick Chasey wrote:I think "pfft, you're lucky to get anything at all, given that, you know, you had no choice in being part of a well off family". If he sells the house he makes a packet right? Even after the tax. Lucky guy as far as I'm concerned.
I'd be (genuinely) interested in your views on this.
I know a couple of parents at our youngest's primary school who live in big mortgage free houses. These houses were both left to them by their parents (I think in one case the aged grand mother was living there too until recently). The families are not loaded - they have "normal" jobs. No flash cars. No big holidays. In short, their incomes are massively out of step with the value of their capital asset.
If Cable had his way, we'd have a mansion tax. At its bluntest, the mansion tax would (say) be 1% per annum on the value of the property over £1 million. Assume these houses are worth £2 million. That's a £20k per annum tax bill. With (for them) no quid pro quo to make a tax saving elsewhere. One of them is *very* windy about the prospect of being able to afford school fees for their only child (how dreadfully middle class, I hear you say). I can't see how they would be able to avoid selling the house to avoid the tax burden.
Fair?
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