If you join the LibDems in a forest...

kingstongraham

Dorset_Boy said:

kingstongraham said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

Is that true? I know there is an additional nil rate band, but the £1m property would still fall above that threshold. If it was £600k and was owned by a couple, it would be nothing to pay, I think.

I'd remove the additional nil rate band for residential properties entirely. It's crazy.

If the property is left to children or grandchildren the Residence Nil Rate Band applies in addition to the normal Nil Rate Band.
So £325,000 (NRB) + £175,000 (RNRB) = £500,000 x 2 = £1,000,000

Grossly unfair on those who are willing to invest in the economy, rather than sit in a (neatly arranged) pile of bricks.

Thanks - that's absolutely insane.

kingstongraham

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

If you moved to a £100k house and kept £900k, it would be tax free though, is that right?

kingstongraham

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

"Because you're dead" seems like a fairly major change in circumstances.

pblakeney

kingstongraham said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

"Because you're dead" seems like a fairly major change in circumstances.

I'd also suggest that it is no longer your main residence. 😉

noun
The place in which one lives; a dwelling.
The act or a period of residing in a place

Dorset_Boy

kingstongraham said:

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

If you moved to a £100k house and kept £900k, it would be tax free though, is that right?

No.
Assuming a couple again, with Children or grandchildren inheriting the property the calculation would be:
£325,000 (NRB) + £50,000 (RNRB) = £375,000 x 2 = £750,000 free of IHT
£250,000 subject to IHT at 40% = £100,000 IHT bill.

(There are rules around moving into care home setting etc that can allow the RNRB to continue)

kingstongraham

Dorset_Boy said:

kingstongraham said:

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

If you moved to a £100k house and kept £900k, it would be tax free though, is that right?

No.
Assuming a couple again, with Children or grandchildren inheriting the property the calculation would be:
£325,000 (NRB) + £50,000 (RNRB) = £375,000 x 2 = £750,000 free of IHT
£250,000 subject to IHT at 40% = £100,000 IHT bill.

(There are rules around moving into care home setting etc that can allow the RNRB to continue)

Why only £50k of RNRB?

Stevo_666

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

So what. The asset was tax free on disposal while you were alive: other assets are not. I don't see anyone complaining about the tax position for the living on that front.

Dorset_Boy

kingstongraham said:

Dorset_Boy said:

kingstongraham said:

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

If you moved to a £100k house and kept £900k, it would be tax free though, is that right?

No.
Assuming a couple again, with Children or grandchildren inheriting the property the calculation would be:
£325,000 (NRB) + £50,000 (RNRB) = £375,000 x 2 = £750,000 free of IHT
£250,000 subject to IHT at 40% = £100,000 IHT bill.

(There are rules around moving into care home setting etc that can allow the RNRB to continue)

Why only £50k of RNRB?

Because the RNRB can only be offset against the property value. So if the property value is less than £350,000 (ie 2 x £175,000) then you can't use all the RNRB as a couple.

Stevo_666

The UK already has one of the highest taxes in the world on inheritance so the right way to go is down if we are to align with international norms.

Many developed countries don't even have IHT (Canada, Australia, NZ, Sweden for example). Others such as the US have high thresholds (over $10m IIRC) to ensure it is only the properly rich get caught by it - which is what it was originally designed to do here, but clearly scope creep has come into play over time as with many other taxes.

rjsterry

Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

rick_chasey

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

Pross

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

It presumably also helps to spend it rather pass it from generation to generation.

kingstongraham

Dorset_Boy said:

kingstongraham said:

Dorset_Boy said:

kingstongraham said:

TheBigBean said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

If you sold it, kept the cash and then died, your estate would pay tax on the cash above £700k. If you kept the house, you'd get £1m.

If you moved to a £100k house and kept £900k, it would be tax free though, is that right?

No.
Assuming a couple again, with Children or grandchildren inheriting the property the calculation would be:
£325,000 (NRB) + £50,000 (RNRB) = £375,000 x 2 = £750,000 free of IHT
£250,000 subject to IHT at 40% = £100,000 IHT bill.

(There are rules around moving into care home setting etc that can allow the RNRB to continue)

Why only £50k of RNRB?

Because the RNRB can only be offset against the property value. So if the property value is less than £350,000 (ie 2 x £175,000) then you can't use all the RNRB as a couple.

So it would be more tax efficient to move into a home worth £350k at least, not downsize any further?

kingstongraham

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

rick_chasey

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

briantrumpet

Another idea:

https://twitter.com/DanNeidle/status/1622276710052904963

Dorset_Boy

rick_chasey said:

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

No sure that's correct. More likely to be approaching retirement, though majority likely to be in the 50 to 70 age bracket. assume last surviving parent was 25 years older than the inheritee child, and average age at death of say 85-87.

kingstongraham

Dorset_Boy said:

rick_chasey said:

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

No sure that's correct. More likely to be approaching retirement, though majority likely to be in the 50 to 70 age bracket. assume last surviving parent was 25 years older than the inheritee child, and average age at death of say 85-87.

So if anything, it's going to make retirement realistic all of a sudden. Quite the opposite of what the government wants to happen.

kingstongraham

briantrumpet said:

Another idea:

https://twitter.com/DanNeidle/status/1622276710052904963

Lib Dems proposed a land tax in 2019, so on topic too.

They had some ideas about inheritance tax.

https://www.theguardian.com/commentisfree/2018/sep/12/wealth-inequality-liberal-democrats-economic-reform

rick_chasey

Dorset_Boy said:

rick_chasey said:

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

No sure that's correct. More likely to be approaching retirement, though majority likely to be in the 50 to 70 age bracket. assume last surviving parent was 25 years older than the inheritee child, and average age at death of say 85-87.

Life expectancy has gone up almost a decade since the 80s when they were making the rulez. Has an impact.

Dorset_Boy

rick_chasey said:

Dorset_Boy said:

rick_chasey said:

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

No sure that's correct. More likely to be approaching retirement, though majority likely to be in the 50 to 70 age bracket. assume last surviving parent was 25 years older than the inheritee child, and average age at death of say 85-87.

Life expectancy has gone up almost a decade since the 80s when they were making the rulez. Has an impact.

Life expectancy for a 65 yo male is c85, and about 87 for a 65 yo female.
When the State Pension age of 65 was introduced in the late 1940s, male life expectancy was 64. Life expectancy increased by about 3 months for each year that passed from 1950 to 2020.
So people are probably inheriting a little later, but significantly more are inheriting something due to the significant increase in home ownership under Mrs T.
Also asset values have increased significantly, but the NRB is unchanged since 2009 and is only £40,000 more than in 2006. So those boomers' estates are paying more in IHT than their forefathers.

Dorset_Boy

Forgot to add, that because the inheritances are later, more deeds of variation are used to enable some of the inheritances to pass directly to Rick's generation as the inheritees aren't so in need of the inheritance.

rick_chasey

Dorset_Boy said:

rick_chasey said:

Dorset_Boy said:

rick_chasey said:

kingstongraham said:

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

With a lot of inheritances, aren't the recipients already retired now?

Yes, though that's a relatively new phenomenon.

No sure that's correct. More likely to be approaching retirement, though majority likely to be in the 50 to 70 age bracket. assume last surviving parent was 25 years older than the inheritee child, and average age at death of say 85-87.

Life expectancy has gone up almost a decade since the 80s when they were making the rulez. Has an impact.

Life expectancy for a 65 yo male is c85, and about 87 for a 65 yo female.
When the State Pension age of 65 was introduced in the late 1940s, male life expectancy was 64. Life expectancy increased by about 3 months for each year that passed from 1950 to 2020.
So people are probably inheriting a little later, but significantly more are inheriting something due to the significant increase in home ownership under Mrs T.
Also asset values have increased significantly, but the NRB is unchanged since 2009 and is only £40,000 more than in 2006. So those boomers' estates are paying more in IHT than their forefathers.

Sure, though their forefathers didn't have social security for a decent chunk of their lives, so that figures.

Stevo_666

rjsterry said:

Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.

Stevo_666

kingstongraham said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

"Because you're dead" seems like a fairly major change in circumstances.

It doesn't change the nature of the underlying asset, which is generally what determines the tax treatment.

Stevo_666

rick_chasey said:

I don't know why people are so against taxing unearned income.

Surely we want to incentivise people to go out and earn money themselves?

Mainly human nature - wanting to look after your family anf descendents. Other than a small number of very high value transfers, it doesn't stop anyone going out and earning, especially as inheritances typically come some way into people's lives.

rjsterry

Stevo_666 said:

rjsterry said:

Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.

Don't think anyone was suggesting changing the effective rate.

kingstongraham

Stevo_666 said:

kingstongraham said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

"Because you're dead" seems like a fairly major change in circumstances.

It doesn't change the nature of the underlying asset, which is generally what determines the tax treatment.

Is there anything you think should be taxed?

webboo

kingstongraham said:

Stevo_666 said:

kingstongraham said:

Stevo_666 said:

Dorset_Boy said:

I'd be inclined to up the rate on residential property.
It is crazy that a couple whose sole asset is a property worth £1.0 million would pay no IHT, yet the couple whose sole asset is investments worth £1.0 million pay £140,000 in IHT.

When you're alive, sale of your main residence is tax free. Not sure why that treatment should change because you're dead.

"Because you're dead" seems like a fairly major change in circumstances.

It doesn't change the nature of the underlying asset, which is generally what determines the tax treatment.

Is there anything you think should be taxed?

Anything slightly socialist.

Stevo_666

rjsterry said:

Stevo_666 said:

rjsterry said:

Not sure of the relevance of Canada or NZ's tax regime on inherited wealth. It's unearned income to the inheritors. Don't see why it should be treated any differently than other unearned income.

I am showing that ever higher IHT is not the answer that many counties have chosen, probably for a good reason.

Don't think anyone was suggesting changing the effective rate.

So what are you suggesting?